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Isolated Margin

Intermediate
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What Is Isolated Margin?

Isolated Margin refers to the specific margin balance assigned to an individual position. This mode enables traders to control their risk on each position by limiting the margin assigned to it. The margin balance for each position can be adjusted independently.

The Isolated Margin can be modified for active positions to prevent potential liquidation by adding extra margin. However, it's not possible to change the margin mode for a position once it's opened, so it's important to review the margin mode settings before entering into a position.

Another commonly used margin mode is Cross Margin, where the entire margin balance is shared across open positions to avoid liquidation. If Cross Margin is enabled, the trader risks losing their entire margin balance and any open positions in the event of a liquidation. Any realized profits or losses from one position can impact another position that is close to liquidation.

Cross Margin is typically the default setting on most trading platforms, especially suited for novice traders due to its straightforward approach. However, Isolated Margin can be beneficial for more speculative positions that require strict downside limitations.

Isolated Margin vs. Cross-margin

Isolated margin and cross-margin have different meanings. Isolated margin refers to the collateral for a specific open position, and a deficit of funds or liquidation for one position does not impact other open positions. On the other hand, cross-margin represents the total collateral balance for multiple open positions, and any deficit in one position can be offset by profits from other open positions.

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