How a liquidation price is worked out
When you trade with leverage you post a fraction of the position as margin and borrow the rest. Liquidation is the point at which your losses have consumed that margin down to the exchange's minimum, and the position is closed automatically to stop the loss going further.
short liquidation = entry × (1 + 1/leverage − maintenance margin)
The dominant term is 1/leverage. At 10x, roughly a 10% move against you wipes the margin. At 50x it takes about 2%. At 100x, a 1% wick — the kind that happens several times a week — is enough.
How little room leverage leaves
Entering long at $42,000 with 0.5% maintenance margin:
| Leverage | Liquidation price | Move against you |
|---|---|---|
| 2x | $21,210 | 49.5% |
| 5x | $33,810 | 19.5% |
| 10x | $38,010 | 9.5% |
| 25x | $40,530 | 3.5% |
| 50x | $41,370 | 1.5% |
| 100x | $41,790 | 0.5% |
Bitcoin has moved more than 3.5% in an hour many times. At 25x, an ordinary hour can end the position.
Staying away from the liquidation price
- Use a stop loss well inside it. Being stopped out costs you a slice of the margin. Being liquidated costs all of it, plus a liquidation fee on most venues.
- Prefer isolated margin. Cross margin lets one bad position draw on your whole balance to stay alive, which turns a single mistake into a general one.
- Remember funding. On perpetual contracts, funding payments quietly erode margin on a position held for days, pulling the liquidation price closer without the market moving at all.
- Size down instead of adding margin. Topping up margin mid-trade is how a planned loss turns into an unplanned one.
Why the exact price varies by exchange
Maintenance margin rises with position size on most venues, so a large position is liquidated earlier than a small one at the same leverage. Some exchanges also mark positions against an index price rather than their own order book, which prevents a single thin market from triggering liquidations — but changes the exact trigger. Check your venue's tiered margin table for anything large. To decide how big the position should be in the first place, use the position size calculator.
Common questions
What is a liquidation price in crypto?
The price at which your losses have eaten through the margin backing a leveraged position, so the exchange closes it automatically to prevent further loss.
How do I calculate liquidation price?
For a long, multiply your entry by one minus the reciprocal of your leverage, then add the maintenance margin rate. For a short, the signs reverse.
Can I lose more than my margin?
On most major exchanges, no — insurance funds and auto-deleveraging absorb the shortfall. Some venues and some jurisdictions do allow negative balances, so check your platform's terms.
Does a stop loss prevent liquidation?
A stop placed comfortably inside your liquidation price should close the position first, but in a fast market a stop can fill at a worse price than expected. Leverage low enough that the two are not close together.
Why does my exchange show a different liquidation price?
Maintenance margin is usually tiered by position size, and unrealised funding payments shift the level over time. This calculator uses a single flat rate, so treat it as an estimate.