What Is Isolated Margin? Explained Simply

What Is Isolated Margin?

Published 2026-08-15. Last updated 2026-08-15. Written by John Alewine, Crypto Guidance Inc.

Isolated margin means the collateral for one leveraged position is capped at what you assigned to that position. If it liquidates, that box can go to zero. The rest of the account is supposed to survive. Cross margin means the position can pull from the whole account. One bad trade can vacuum everything. I would rather you used neither. If you insist, isolated is the less-stupid default.

Who This Is For

People already staring at a perp screen who need the toggle explained before they click it. It is not a beginner topic. If you have not read leverage and the leverage lesson, go there first and stay off the futures tab.

How It Actually Works

You open a perp. Isolated: you assign $200. Price runs against you, maintenance margin fails, that $200 is gone. Cross: the exchange marks the position against your whole balance. A quiet coin in the corner can die to save (or kill) the noisy one.
Isolated can still hurt. You can keep adding margin "to save it" until you have recreated cross by hand.
Funding, fees, and insurance funds still apply. Isolated is a fence, not a strategy.

Risks I See in Sessions

Leaving the UI on cross because it was the default. Check. Every time. New accounts often default to the more dangerous setting.
Hedging in your head while both legs sit on cross in the same account. That is not a hedge. That is one liquidation engine.

When It Matters

Any time a venue offers leverage. Most people I work with should not be there. The Trading page is the adult version of this conversation. If you are going to do it anyway, isolated, small, and with money already written off.