Isolated Margin

Isolated Margin Portfolio

An isolated margin portfolio refers to a trading account in which the margin requirements for each position are calculated separately. This means that the margin required for one position does not impact the margin available for other positions within the portfolio.

In isolated margin trading, traders can allocate specific amounts of margin to each position they hold. This allows for more precise risk management, as traders can control the amount of leverage they use for each trade independently. It can be particularly useful for traders who want to limit their exposure to any single position or asset.

Position size adjustment

Users have the flexibility to adjust the size of open positions, similar trading features found in CEX exchanges.

Add / Reduce margin

For Isolated margin, Drake currently only allows the settlement currency asset to be utilized as margin.

Users can allocate arbitrary additional margin on top of an open position. However, please note that there is a 1% fee charged when the user initially allocates the additional margin, as well as when the user adds or reduces the margin thereafter.

Liquidation

An isolated open position will be liquidated when its margin ratio falls at or below 110%.

open position margin ratio formula:

margin ratio = (margin + additional margin + position unrealized PnL) / (margin * maintenance margin ratio (5%))

If a position is liquidated, users can find the record in their order history labeled as "liquidation".

Isolated Margin Collateral Swap

In isolated-margin portfolios, users can swap the available balance on the portfolio. Drake currently routes swap order flow to Aerodrome AMM pool.