When you trade with leverage, you post margin as collateral. As the trade moves against you, the unrealised loss eats into that margin. Once your remaining equity falls to the maintenance margin, the exchange's liquidation engine closes the position at market. Exchanges use the mark price, not the last trade, to decide when that happens, and many charge an extra liquidation fee.
Example
You open a 10× isolated long on BTC at $50,000, so your margin is 10% of the position. With a 0.5% maintenance margin rate, the liquidation price is about $50,000 × (1 − 1/10) ÷ (1 − 0.005) ≈ $45,226, a fall of roughly 9.5%. At 25× the same formula gives about $48,241, less than 4% away.
Why it matters
Liquidation is the worst exit you can get: it happens at market, often in a fast move, with a fee on top, and it can take your whole margin. Knowing the liquidation price lets you choose a leverage at which your stop loss always triggers first.
Common mistake
Treating the liquidation price as your stop. If the stop is not placed before liquidation, the exchange decides your exit. Set the stop from your setup first, then pick a leverage low enough that liquidation sits clearly beyond it, with room for wicks and fees.
Put it into practice
- Free toolLiquidation price calculatorEstimate the liquidation price of a long or short perpetual on Binance, Bybit or OKX, in isolated or cross margin, with simplified maintenance margin tiers.
- Free toolPosition size calculatorSize any futures trade from your account, risk % and stop. See quantity, notional, margin and whether your stop sits before the liquidation price.
FAQ
- How do I calculate my liquidation price?
- For an isolated long, roughly entry × (1 − 1/leverage) ÷ (1 − maintenance rate); for a short, entry × (1 + 1/leverage) ÷ (1 + maintenance rate). Exchanges add fees and tiered rates, so treat any formula as an estimate and check the figure your exchange shows.
- Does higher leverage move the liquidation price closer?
- Yes. At 10× the price can move about 10% against you before liquidation, at 50× only about 2%, and the maintenance margin brings both a little closer. Position size sets your risk; leverage decides how close liquidation is.
- Why was I liquidated when the chart never reached my liquidation price?
- Exchanges trigger liquidation on the mark price, which can differ from the last traded price shown on the chart. In cross margin, losses on other positions also reduce the margin available to this one.