Isolated Margin Mechanisms

Isolated Margin Mechanisms restrict the collateral for a specific position to a predefined amount, independent of the rest of the account balance. This creates a firewall between different trades, ensuring that a liquidation in one position does not automatically affect others.

This mechanism is ideal for traders who want to limit their downside risk for specific, high-risk bets. By isolating the collateral, the trader has more control over their exposure and can better manage their overall portfolio risk.

However, it also requires more active management, as each position must be individually funded and monitored. This approach is a standard feature in many crypto derivative platforms, providing a safer environment for users who prefer granular control over their leverage.