If I have $1000 in my Margin account and I put it all in a 10x Isolated short trade for $10000 (meaning I am borrowing $9000), the Liquidation Price is then worked out at the exact point where I have lost the full $1000 from my Margin account and I cannot lose any more than this on this trade? is my understanding correct?
True if it's isolated margin. Even if you had $2,000 in your margin account. You would lose only the $1,000 you used as collateral to borrow the $9,000. It's a different case however for cross-margin. Any other funds left in your margin account could end up getting liquidated or lost if the price moved in the opposite direction of your open position.