Crypto liquidation price
Liquidation price is the exchange's forced-risk boundary, not a recommended exit. It depends on margin rules that a simple leverage formula omits.
Written and reviewed byCryptoTrades.to View author →What is a liquidation price?
It is the estimated mark price at which a leveraged position no longer has enough equity to meet the venue’s maintenance requirement. The exchange can then reduce or close it to protect the borrowed funds or contract system.
Liquidation is not the same as a stop-loss. A stop is chosen by the trader. Liquidation is chosen by the venue’s risk engine.
A useful estimate for a long position
Ignoring maintenance margin and costs, a long’s rough loss capacity is entry price divided by leverage. At $100 entry and 10x, that suggests a boundary near $90. The real liquidation price will normally be higher because equity must remain for maintenance margin and closing costs.
| Entry | Leverage | Simple adverse move | Simplified boundary |
|---|---|---|---|
| $100 | 2x | 50% | $50 |
| $100 | 5x | 20% | $80 |
| $100 | 10x | 10% | $90 |
| $100 | 20x | 5% | $95 |
These are teaching estimates, not account values. Use our liquidation calculator and then verify the exchange preview before submitting.
Why does the exchange show a different number?
The exact engine includes maintenance-margin tiers, contract type, direction, fee reserves, existing unrealised P&L, added collateral and sometimes other cross-margin positions. Inverse contracts also behave differently from linear USDT-settled contracts.
The trigger is usually mark price, an index-based fair-price estimate. A venue’s last traded price can briefly differ without triggering liquidation.
What changes the liquidation price?
- Higher leverage brings it closer to entry.
- More isolated margin pushes it farther away.
- A larger position can enter a higher maintenance tier.
- Cross-margin balances and other P&L can move it continuously.
- Funding and fees gradually reduce available equity.
This is why a screenshot of the liquidation price is not permanent evidence. It belongs to that exact account state.
What happens during liquidation?
The risk engine may cancel orders, partially reduce the position or close it completely. Execution can involve an insurance fund or auto-deleveraging rules during extreme moves. The trader loses control of exit timing and may pay liquidation-related charges.
The correct distance to liquidation is “farther than the planned stop,” not “as close as the interface allows.”
How should a stop be placed relative to liquidation?
Place the stop at the point the trade thesis is invalid, size the position from the permitted dollar loss, and select leverage afterward. Leave room between stop and liquidation for mark-price differences, slippage and volatility. If the stop cannot fit safely, the position is too large or the leverage is too high.
For the full account mechanics, continue with margin trading and leverage trading.
Questions people actually ask
01What is the maintenance margin for futures?
Maintenance margin is the minimum equity a futures position must retain to remain open. The percentage depends on the exchange, contract and position-size tier.
02How do you calculate maintenance margin?
A basic estimate multiplies position notional by the venue's maintenance-margin rate. Exact account requirements can also include tier deductions, fees and unrealised profit or loss.
03What happens if your maintenance margin rate reached 100%?
On interfaces that express risk this way, reaching the liquidation threshold means the venue can cancel orders and reduce or close the position. The exact trigger definition must be checked in that venue's rules.
04How much margin is needed to open 1 lot 100,000 with 1/100 leverage?
Using the simple notional-divided-by-leverage calculation, 100,000 at 100x requires 1,000 of initial margin before extra requirements and fees. Crypto contract lot sizes and venue tiers can change the actual amount.