How it works
A liquidation price calculator estimates where a leveraged position dies: the price at which losses have consumed the posted margin and the exchange force-closes the trade. The arithmetic is compact. Leverage splits your capital into collateral and borrowed exposure — 10x means one part yours, nine parts loaned — so a long can only tolerate roughly one-tenth of the position in adverse movement before the collateral is gone. Subtract the exchange's maintenance margin, the small residual cushion it demands before intervening, and the buffer to liquidation is approximately one-over-leverage minus that maintenance rate: at 10x with a 0.5% maintenance requirement, about a 9.5% adverse move. Longs liquidate below entry by that distance, shorts above it. Enter entry price, leverage, direction, margin deposited and the maintenance rate; the calculator returns the estimated liquidation price, the buffer, the full position value and what isolated-margin closure would cost. Leverage squeezes the corridor non-linearly — 2x leaves nearly half the move available, 50x leaves almost none — which is why the same market wiggle is trivial at low leverage and terminal at high. Treat the answer as an estimate: tiered maintenance schedules, mark-price triggers, funding payments draining margin and insurance-fund mechanics all shift the true point, and none of them ever in your favor.
Formula
long: entry x (1 - (1/leverage - MMR)) | short: entry x (1 + (1/leverage - MMR))
Tips
- Compute the liquidation price before opening the trade, not after — it belongs in the plan, not the autopsy.
- Place a stop-loss comfortably ahead of liquidation: a small known loss beats a cascading-wick close at the worst print.
- Halving the leverage roughly doubles the adverse-move buffer — the cheapest risk reduction available.
- Add margin or trim size as funding drains the balance; static estimates drift closer every day a position runs.
- Know your exchange's tiered maintenance schedule — larger positions face higher rates and tighter corridors than the base number suggests.
Frequently asked questions
- What is a liquidation price?
- The price at which a leveraged position's losses have eaten the posted margin, prompting the exchange to force-close it. For a long it sits below entry by roughly one-over-leverage minus the maintenance margin rate; for a short, symmetrically above.
- How is the liquidation price calculated?
- Approximately: entry times one minus (one divided by leverage, minus the maintenance margin rate) for longs, mirrored for shorts. At 10x and 0.5% maintenance, the buffer is 9.5%, so a $60,000 long liquidates near $54,300. Exact figures vary by venue — fees, funding and tiered margins all adjust it.
- How much can the price drop before liquidation?
- About one-over-leverage minus the maintenance requirement: 50% at 2x, 16.7% at 6x, 9.5% at 10x, under 2% at 50x. The relationship is inverse and steep — doubling leverage halves the breathing room, which is why high leverage turns routine volatility into forced exits.
- How do I avoid liquidation?
- Use lower leverage, size positions so a liquidation-level move cannot reach them, set stop-losses well inside the buffer, monitor funding drains, and top up isolated margin when a thesis is intact but the corridor has narrowed. Avoiding liquidation is mostly avoiding excessive leverage.
- Does the maintenance margin differ by exchange?
- Substantially. Each venue sets its own base rate and tiered schedule — bigger positions require higher maintenance fractions — and triggers on a mark price constructed from multiple venues rather than the last traded price. Always read the contract's actual schedule; the base number understates large positions.