What Is the Maximum Loss a Trader Can Incur with Isolated Margin?
With isolated margin, the maximum loss a trader can incur is limited to the initial margin they allocated to that specific position. Since the position is separated from the rest of the account, the exchange cannot draw additional funds from the trader's main balance.
The insurance fund is designed to cover any negative balance that might arise if the liquidation execution price falls below the bankruptcy price, protecting the trader from further debt.
