What is Isolated Margin Trading (Derivatives Trading)?

Isolated margin trading is a form of margin trading that allows the trader to limit their losses to the initial margin set, thus limiting the amount of margin being allocated to each position. Because highly leveraged positions are more likely to be liquidated in volatile markets, traders are able to limit their risk for individual positions by using isolated margin. For example, if a trader's position is liquidated using isolated margin mode, only the isolated margin balance is liquidated, instead of the entire available account balance. The opposite of isolated margin trading is cross-margin trading.