How to Calculate Your Liquidation Price: Complete Guide

Knowing your exact liquidation price is crucial for managing risk in margin trading. This guide shows you how to calculate it for different scenarios and explains the factors that affect it.

What Determines Your Liquidation Price?

Your liquidation price depends on:

Entry price — The price you opened the position at

Leverage — Higher leverage = closer liquidation price

Margin mode — Cross vs isolated changes the calculation

Maintenance margin rate — Set by the exchange per trading pair

Position direction — Long vs short

Fees — Liquidation fees reduce your effective margin

Liquidation Price Formulas

Long Position (Isolated Margin)

Liquidation Price = Entry Price × (1 - 1/Leverage + Maintenance Margin Rate)

Simplified (ignoring maintenance margin): Liquidation Price ≈ Entry Price × (1 - 1/Leverage)

Short Position (Isolated Margin)

Liquidation Price = Entry Price × (1 + 1/Leverage - Maintenance Margin Rate)

Simplified: Liquidation Price ≈ Entry Price × (1 + 1/Leverage)

Practical Examples

Example 1: BTC Long at 10x

• Entry: $50,000
• Leverage: 10x
• Maintenance margin: 0.5%
• Liquidation ≈ $50,000 × (1 - 0.1 + 0.005) = $45,250
• Price needs to drop ~9.5% to get liquidated

Example 2: BTC Short at 10x

• Entry: $50,000
• Leverage: 10x
• Maintenance margin: 0.5%
• Liquidation ≈ $50,000 × (1 + 0.1 - 0.005) = $54,750
• Price needs to rise ~9.5% to get liquidated

Example 3: ETH Long at 25x

• Entry: $3,000
• Leverage: 25x
• Maintenance margin: 0.5%
• Liquidation ≈ $3,000 × (1 - 0.04 + 0.005) = $2,895
• Price needs to drop only ~3.5% to get liquidated!

Example 4: Low Leverage BTC Long at 2x

• Entry: $50,000
• Leverage: 2x
• Maintenance margin: 0.5%
• Liquidation ≈ $50,000 × (1 - 0.5 + 0.005) = $25,250
• Price needs to drop ~49.5% — much safer!

Liquidation Distance by Leverage

Cross Margin Liquidation

With cross margin, the calculation is more complex because your entire balance acts as collateral:

Liquidation occurs when: Total Account Equity < Maintenance Margin Requirement for All Positions

This means:

• Adding funds to your account moves liquidation price further away
• Other position profits help prevent liquidation
• But losses from all positions combined can trigger liquidation

Tips for Managing Liquidation Risk

Always know your liquidation price before entering a trade

Set stop-losses well above/below your liquidation price (at least 50% of the distance)

Use the exchange's built-in liquidation price calculator

Account for fees — they reduce your effective margin

Monitor your margin ratio during high volatility

Add margin to positions if they move against you (if you still believe in the trade)

Exchange Liquidation Price Calculators

Most exchanges provide built-in calculators:

• Binance: Shows liquidation price when opening a position
• Bybit: Position calculator in the trading interface
• OKX: Advanced calculator with margin mode selection
• Kraken: Displays estimated liquidation price

Use these tools — don't rely on mental math for something this important.

*Disclaimer: These formulas are simplified. Actual liquidation prices may vary due to fees, funding rates, and exchange-specific calculations. Always use your exchange's official calculator.*