Isolated margins and cross-margining

Margin acts as a guarantee or security for the trader's position. If the position moves against the trader, the margin acts as a buffer to prevent the trader from losing more money than the margin can cover. If the trader's position moves in their favor, the margin will be released back to the trader's account, allowing them to use it for other trades.

Isolated margining is a risk management technique that allows traders to allocate a specific amount of funds to a particular position. This method ensures that the margin required for one position is not used to support any other open positions.

Cross-margining is a method of margining in which the trader's total margin requirement is calculated based on their total portfolio's risk rather than just the position they hold in a single contract. While cross-margining can potentially reduce margin requirements, it also increases the risk of margin calls, which occur when the margin falls below a certain threshold, forcing the trader to either deposit additional collateral or close their position.