Isolated margin assigns a separate collateral amount to a derivatives position. The exchange evaluates that position against its own margin requirements rather than pooling all eligible account collateral under cross margin.
Position-Level Collateral
A trader may add or remove margin from an isolated position, subject to the venue's rules. Losses reduce the position's equity. If the exchange's maintenance requirement is no longer met, its liquidation system can reduce or close the position.
Isolated margin limits which balance supports the position under the account's rules. Fees, auto-deleveraging, collateral settlement, or other exchange features may affect the final account result, so the mode does not guarantee that other balances remain untouched.
Example
A trader allocates $500 to an isolated position. The position's losses and costs reduce the equity available in that allocation. The exchange's maintenance tier and mark price determine the relevant threshold. The $500 figure alone does not reveal the liquidation price.
Comparison
Cross margin can share eligible collateral across positions. Isolated margin separates the allocation for a position. The right account mode depends on a trader's risk plan and the venue's rules.
See Cross Margin, Margin, Leverage, and Liquidation Price. Hyperliquid's margining documentation explains one venue's isolated-position rules.