Liquidation Price Guide: How Liquidation Actually Happens

What is the liquidation price?

When floating losses push your position equity below the exchange's “maintenance margin” requirement, the exchange triggers liquidation. The liquidation price is the mark price at which that trigger occurs.

A common myth is that at 100× leverage you only liquidate after a 1% move. In reality exchanges also require maintenance margin, so the trigger usually arrives earlier than the rough estimate.

What determines the liquidation price?

• Entry price and quantity: they define notional value and how fast losses accumulate.
• Leverage: it decides the initial margin you put up.
• Maintenance margin rate: many exchanges use tiered rates that rise with position size.
• Isolated vs cross margin: cross mode adds your whole account balance as a buffer.
• Fees, funding and slippage: they slightly change your real equity and the trigger point.

Why “1 ÷ leverage” is not enough

For a long position, liquidation happens before your margin is fully gone: equity must always stay at or above maintenance margin. That pulls the trigger price closer to your entry.

A simplified estimate for longs: liquidation price ≈ entry price × (1 − 1/leverage + maintenance margin rate). Even ignoring fees, the real liquidation price arrives earlier than a pure “1/leverage” move.

Isolated vs cross and their liquidation levels

In isolated mode, available margin comes only from that position's initial margin. In cross mode, your full available balance backs the position, pushing the liquidation price further away — but an extreme move can affect the whole account at once.

Hedging and grid strategies sometimes use cross margin to spread risk, but only if you can tolerate the overall drawdown. Otherwise isolated margin keeps risk contained per trade.

Ways to reduce the chance of liquidation

• Use lower leverage and keep a generous buffer for volatility.
• Place your stop loss before the liquidation price with room for fees and slippage.
• Use isolated margin so one trade cannot cascade into your whole account.
• Avoid high-leverage positions right before major data releases or volatile windows.
• Watch funding rates: holding for a long time slowly turns funding into an equity drain.

Calculate the trigger before you open

Plug entry price, quantity, leverage and the maintenance margin rate into the liquidation price calculator to see the estimated trigger in advance. Combine it with the futures PnL calculator to review profit/loss and ROE at different exit prices, and keep the plan inside a range you can tolerate.

This guide is for educational purposes only and is not investment advice. Always follow your exchange's actual margin, liquidation and fee rules, and keep a buffer for extreme market moves.