What is isolated margin on Kraken?

Isolated margin on Kraken limits risk to only the funds allocated per trade, protecting your overall portfolio from single-trade losses—ideal for disciplined, strategy-specific trading. (154 characters)

Jul 31, 2025 at 02:01 pm

Understanding Isolated Margin on Kraken

Isolated margin on Kraken refers to a margin trading mode where the risk of a trade is limited to the specific amount of funds allocated to that trade. Unlike cross margin, which uses your entire account balance as collateral, isolated margin caps your exposure. This means if a trade goes south, only the designated margin amount is at risk—not your full portfolio. This setup is ideal for traders who want to manage risk on individual positions without jeopardizing their entire Kraken account. Isolated margin gives you precise control over how much capital you're willing to risk per trade.

How Isolated Margin Differs from Cross Margin

On Kraken, cross margin uses your total available balance across all assets as collateral for open margin positions. If one position starts losing money, the platform may automatically draw from other assets to prevent liquidation. In contrast, isolated margin locks in a set amount for each trade. This separation ensures that a single losing trade won’t trigger a cascade of margin calls across your portfolio. Traders often choose isolated margin when they’re testing new strategies or trading volatile assets, as it prevents unexpected liquidations from unrelated positions.

Setting Up Isolated Margin on Kraken: Step-by-Step

To activate isolated margin on Kraken, follow these steps precisely:

• Navigate to the Kraken Pro trading interface.
• Select the asset pair you want to trade (e.g., BTC/USD).
• Look for the margin toggle switch—click it to enable margin trading.
• Choose “Isolated” from the dropdown menu next to the margin mode option.
• Enter the exact amount of collateral you want to allocate to this specific trade.
• Confirm your selection by clicking “Enable Isolated Margin.”

This process must be repeated for each new trade if you want it isolated. Note that Kraken does not auto-apply isolated margin to all trades—you must manually set it per position.

Liquidation Mechanics in Isolated Margin Mode

In isolated margin, each position has its own liquidation price based solely on the allocated margin and leverage used. For example, if you allocate 0.1 BTC as margin for a BTC/USD short at 5x leverage, the liquidation price depends only on that 0.1 BTC—not your other holdings. If the price moves against you and hits the liquidation threshold, only that 0.1 BTC is at risk of being liquidated. You’ll receive a margin warning before liquidation, allowing you to add more margin or close the position manually to avoid total loss.

When to Use Isolated Margin on Kraken

Isolated margin is best suited for traders who want to compartmentalize risk. If you’re experimenting with altcoin pairs, testing a new algorithm, or managing multiple strategies simultaneously, isolated margin prevents one bad trade from affecting others. It’s also useful when you want to maintain a strict risk-reward ratio per trade without worrying about cross-position dependencies. Conservative traders often prefer this mode because it enforces discipline—once the allocated margin is gone, the trade ends, no surprises.

Managing Isolated Margin Positions Post-Trade

After opening an isolated margin position, you can monitor it in the “Open Positions” tab on Kraken Pro. From there:

• View the liquidation price, current margin level, and unrealized P&L.
• Add more margin to the position if needed to avoid liquidation.
• Reduce leverage dynamically to increase the liquidation buffer.
• Close the position manually at any time to lock in profits or cut losses.

Kraken allows real-time adjustments to isolated positions without switching to cross margin. This flexibility means you can respond to market shifts without exposing your entire account.

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Frequently Asked Questions

Can I switch from isolated to cross margin on an active trade?

No. Once a position is opened in isolated margin mode, it must remain isolated until closed. You cannot convert it to cross margin mid-trade. You’d need to close the isolated position first, then reopen it in cross margin if desired.

Does Kraken charge different fees for isolated vs. cross margin?

No. Kraken applies the same taker/maker fee structure regardless of margin mode. Fees are based on your 30-day trading volume and asset type—not whether you use isolated or cross margin.

What happens if my isolated margin position gets liquidated?

Only the allocated margin is lost. Kraken will close the position automatically at the liquidation price. No further action is required from you, and your other assets remain untouched.

Can I use stop-loss orders with isolated margin on Kraken?

Yes. You can set stop-loss, take-profit, and trailing stop orders on isolated margin positions just like any other trade. These orders help manage risk within the isolated margin framework without affecting other holdings.