Isolated margin trading is a powerful risk management tool that allows traders to allocate a specific amount of capital to a single position, limiting potential losses to only that designated margin. Whether you're trading spot, futures, perpetuals, or options, understanding isolated margin mechanics—especially in multi-currency and portfolio setups—is essential for maximizing returns while minimizing exposure.
This guide breaks down how isolated margin works across different trading products, explains key metrics like maintenance margin, liquidation price, and PnL calculation, and highlights critical rules for opening, managing, and closing positions safely.
👉 Discover how isolated margin can boost your trading strategy with precise risk control.
Understanding Isolated Margin Mode
In isolated margin mode, each trading pair has its own dedicated margin balance. This means the risk of one position does not affect other positions in your account. If a trade goes south, only the allocated margin for that specific trade is at risk—your entire account isn’t jeopardized.
There are several variations:
- Spot isolated margin
- Futures/perpetuals isolated margin
- Multi-currency isolated margin
- Portfolio margin (cross-margin within isolated framework)
Each follows core principles but differs in how equity, debt, and collateral are calculated.
Key Requirements for Trading in Isolated Margin Mode
To open or maintain a position under isolated margin:
- For single-currency isolated margin: The available balance of the relevant cryptocurrency must be greater than or equal to the amount required by the order.
- For multi-currency isolated margin: The total adjusted equity in your account must cover the held equity of pending orders, and the available balance of the involved currency must meet order requirements.
This dual-check ensures sufficient liquidity and reduces systemic risk.
Core Components of an Isolated Position
When you enter a trade using isolated margin, your position displays several key fields:
| Field | Description |
|---|---|
| Asset | Amount of crypto purchased (after deducting fees). For legacy users not upgraded, this includes both base asset and margin balance. |
| Debt | Amount of crypto borrowed, including accrued interest. |
| Margin | Collateral allocated specifically to this position. |
| Entry Price | Average price at which the position was opened. Calculated as: (Initial amount × Initial price + Additional amount × Execution price) / (Initial + Additional) |
| Estimated Liquidation Price | The price at which your position will be partially or fully liquidated. Formula varies based on asset used as collateral and trade direction (long/short). |
| Floating PnL | Unrealized profit or loss based on current mark price. Varies by whether base or quote currency is used as collateral. |
| Floating PnL % | Floating PnL divided by initial margin. |
👉 See how real-time PnL tracking enhances your trading decisions.
Long and Short Positions: Examples in Old vs New Isolated Margin Systems
OKX supports both legacy and upgraded isolated margin systems. Here's how positions differ:
Buying 1 BTC at $100,000 with 10x Leverage
| Collateral Type | Legacy System | Upgraded System |
|---|---|---|
| Base Coin (BTC) | Asset = 1.1 BTC Debt = -100,000 USDT Margin = 0.1 BTC | Asset = 1 BTC Debt = -100,000 USDT Margin = 0.1 BTC |
| Quote Coin (USDT) | Asset = 1 BTC Debt = -100,000 USDT Margin = 10,000 USDT | Same as legacy |
Selling 1 BTC at $100,000 with 10x Leverage
| Collateral Type | Legacy System | Upgraded System |
|---|---|---|
| Base Coin (BTC) | Asset = 100,000 USDT Debt = -1 BTC Margin = 0.1 BTC | Same as legacy |
| Quote Coin (USDT) | Asset = 110,000 USDT Debt = -1 BTC Margin = 10,000 USDT | Asset = 100,000 USDT Debt = -1 BTC Margin = 10,000 USDT |
The updated system removes inflated asset values, offering clearer transparency into actual holdings.
How to Close an Isolated Position
Closing rules depend on which asset type is used as collateral.
Closing Long Positions
- Using Base Currency as Collateral: Must fully repay quote currency debt.
- Using Quote Currency as Collateral: Must sell all base currency assets in the position.
⚠️ After selling all assets, if debt remains, the remaining margin will be used to offset it before final closure.
Closing Short Positions
- Using Base Currency as Collateral: Must sell all quote currency assets.
- Using Quote Currency as Collateral: Must fully repay base currency debt.
⚠️ Same offset rule applies—remaining margin covers outstanding debt if needed.
Methods to Close Positions
You can close positions via the positions tab or order book:
| Method | Behavior |
|---|---|
| Market – Close All (via Positions Tab) | Automatically sells/buys back entire position. Excess funds returned to account balance. |
| Limit/Market Orders (Manual) | User manually places orders to close. Works similarly but offers more control. |
| Reduce-Only Orders (via Order Book) | Only reduces existing position; cannot increase it. |
| Non-Reduce-Only Orders | First closes current position; any excess fills open a reverse position using available account balance as new margin. |
Example:
Sell 2 BTC when holding a long of 1 BTC → 1 BTC closes the position; remaining 1 BTC opens a short with corresponding margin drawn from account.
Perpetual & Futures in Isolated Margin Mode
Isolated margin for perpetual and futures contracts supports two modes:
- Hedging Mode – Allows simultaneous long and short positions.
- One-Way Mode – Only one directional position per symbol.
Key Metrics
| Term | Definition |
|---|---|
| Total | Net position size (positive for longs, negative for shorts). |
| Available | Only shown in Hedging Mode: Total – Pending close orders. |
| P&L | Unrealized profit/loss: - Coin-margined: Based on inverse pricing. - USDT-margined: (Mark Price – Entry) × Size × Multiplier |
| P&L Ratio | P&L / Initial Margin |
| Liquidation Price | Varies by collateral type and direction; uses maintenance margin rate and taker fee. |
| Margin Balance | Initial margin + adjustments (additions/deductions). |
| Maintenance Margin | Minimum required to keep position open; calculated using mark price and MMR%. |
| Margin Level | (Margin Balance + P&L) / [Position Value × (MMR% + Taker Fee%)] |
A margin level below 100% triggers liquidation.
Options Isolated Margin
For options traders, isolated margin works slightly differently:
| Term | Definition |
|---|---|
| Total | Sum of positions (long = positive, short = negative). |
| Option Value | Position × Mark Price × Contract Multiplier |
| P&L | (Mark Price – Avg Entry) × Total Position × Multiplier |
| P&L Ratio | For longs: (Mark – Entry)/EntryFor shorts: (Entry – Mark)/Entry |
| Margin Balance | Initial + manual adjustments |
| Maintenance Margin | Based on worst-case scenario risk for short positions |
| Margin Level | Margin Balance / (Maintenance Margin + Liquidation Fee) |
Liquidation occurs when margin level drops ≤100%.
Risk Assessment Across Products
Each product (spot, futures, options) evaluates isolated position risk independently. Cross-product risks are separated—your spot isolated position won’t impact your futures portfolio unless using cross-margin settings.
Risk is assessed via:
- Margin level
- Maintenance margin requirements
- Mark price fluctuations
- Funding rates (for perpetuals)
All contribute to determining whether a position remains safe or faces liquidation.
Liquidation Rules by Product Type
General Triggers
- < 300% Margin Level: Liquidation warning issued.
≤ 100% Margin Level: All related orders canceled.
- If level >100% after cancellation →恢复正常
- If ≤100% → Partial or full liquidation begins.
Spot Isolated Margin Liquidation
For large positions (Tier 2+), partial liquidation may occur:
- System calculates amount needed to reduce tier by one level.
- Example: Borrowed 110 BTC → Max for Tier 2 is 100 → Liquidate 10 BTC.
Full liquidation occurs only if:
- Position is Tier 1 and undercollateralized.
- Or even lowest-tier MMR calculation falls below 100%.
Futures/Perpetuals Isolated Margin
For Tier 3+ positions:
- If current-tier MMR <100% but lowest-tier MMR >100%, partial liquidation reduces tier by two levels.
- In Hedging Mode: Opposing long/short pairs are closed immediately.
Options Isolated Margin
Pending close orders canceled first.
- If still ≤100%, partial liquidation reduces tier by one level.
- Full liquidation at bankruptcy price occurs only if lowest-tier requirement is breached.
Frequently Asked Questions (FAQ)
Q: What is the main benefit of isolated margin?
A: It limits risk to only the capital allocated to a specific trade, protecting the rest of your portfolio from cascading losses.
Q: Can I switch between isolated and cross-margin modes?
A: Yes, but you must close all positions first. Switching affects how collateral is calculated and shared across trades.
Q: How is liquidation price calculated for a BTC/USDT long using BTC as collateral?
A: (|Debt + Interest| × (1 + MMR%) × (1 + Taker Fee)) / (Asset + Margin) — applies to the new isolated margin system.
Q: Why did my position get partially liquidated instead of fully closed?
A: To prevent systemic collapse, OKX uses tier-based partial liquidations for large positions, reducing exposure step-by-step.
Q: Does floating PnL include fees?
A: No, floating PnL reflects unrealized gains/losses based on mark price vs entry. Fees are deducted upon execution.
Q: Can I add more margin during a liquidation event?
A: Yes—if done quickly enough before full execution, adding margin can raise your margin level above 100% and halt liquidation.
Final Thoughts
Isolated margin gives traders precision control over leverage and risk. By understanding how asset, debt, and margin interact—and knowing when liquidation kicks in—you can trade confidently across spot, futures, and options markets.
Whether you're leveraging base coins or stablecoins as collateral, staying above the 100% threshold is crucial. Use stop-losses, monitor mark prices closely, and always know your liquidation point.
👉 Start managing your risk smarter with advanced isolated margin tools today.