Liquidation price: how to calculate it

What triggers liquidation

Every position needs a minimum maintenance margin — a percentage of the position value. When losses eat the margin down to that level, the exchange closes the position. The trigger is the mark price, not the last traded price, which protects against short spikes on one exchange.

Simplified formula (isolated margin)

Ignoring fees and funding, with leverage L and maintenance margin rate m:

• Long: liquidation ≈ entry × (1 − 1/L + m)
• Short: liquidation ≈ entry × (1 + 1/L − m)

Exchanges use tiered maintenance rates (larger positions need more), add fees and deduct funding, so the exact number on the screen will differ slightly. The formula is for intuition, not for placing your stop at the edge.

Examples

Long BTC at 60,000, maintenance 0.5%:

• 5×: 60,000 × (1 − 0.2 + 0.005) ≈ 48,300 — about 19.5% away
• 20×: 60,000 × (1 − 0.05 + 0.005) ≈ 57,300 — about 4.5% away
• 50×: 60,000 × (1 − 0.02 + 0.005) ≈ 59,100 — about 1.5% away

At 50× an ordinary wick is enough.

Cross margin changes the picture

With cross margin the whole available balance supports the position, so liquidation is further away — but a single bad position can take the whole balance with it. Isolated margin limits the loss to the margin of that position.

How to stay far from it

• Use a stop-loss well before the liquidation price — liquidation is the worst possible exit, with an extra fee.
• Choose leverage from your stop distance, not the other way around.
• Watch funding on long holds: paid funding is taken from margin and moves liquidation closer.

In CheckMyProfit (Ultra) the Telegram bot can warn you when an open position comes within 5, 10 or 20% of its liquidation price.