How to Calculate Liquidation Price (Formula + Examples)

Your liquidation price is the single most important number in leveraged trading. It is the price at which the exchange force-closes your position and you lose the margin backing it - no warning, no negotiation. Knowing it before you enter is the difference between a controlled trade and a surprise blow-up. The good news: it comes from a simple formula, and once you understand it you can size any trade so a normal market move can never reach it. If you just want the number, the liquidation calculator does it instantly - but the math is worth understanding.

The liquidation price formula (isolated margin)

On isolated margin - where only the margin assigned to one position is at risk - the estimate is:

• Long: Liquidation = Entry × (1 − 1/Leverage + MMR)
• Short: Liquidation = Entry × (1 + 1/Leverage − MMR)

MMR is the maintenance margin rate - the minimum margin the exchange requires to keep the position open, typically around 0.5% on major perpetuals. The real driver is the 1/Leverage term: that is your initial margin as a fraction of the position, and it sets how far price can move before your margin is gone. A long is liquidated when price falls by roughly 1/Leverage; a short when price rises by roughly the same. The maintenance margin nudges the level slightly closer than that.

Leverage decides everything: the distance table

Because the distance to liquidation is approximately 1/Leverage, higher leverage pulls the liquidation price right up against your entry. This single relationship explains why most leveraged accounts are wiped out:

At 100× a move most people would not even notice on the chart ends the trade. That is why high leverage feels random: you are not being wrong about direction, you are being stopped out by ordinary noise before your idea has a chance to play out.

Worked example 1 - 10× long on Bitcoin

You go long BTC at an entry of $60,000 with 10× leverage and a 0.5% maintenance margin. Plugging into the long formula: 60,000 × (1 − 1/10 + 0.005) = 60,000 × 0.905 = $54,300. Your liquidation sits about 9.5% below entry. To hold this trade safely you would place a stop-loss comfortably above $54,300 - say at $57,600 (−4%) - so you decide the exit, not the exchange.

Worked example 2 - 20× short on Ethereum

You short ETH at $3,000 with 20× leverage. Using the short formula: 3,000 × (1 + 1/20 − 0.005) = 3,000 × 1.045 = $3,135. Your liquidation is only about 4.5% above entry - a single strong green candle. Shorts carry an extra wrinkle: a violent squeeze has no theoretical ceiling, so the upside move that liquidates a short can be far larger and faster than the downside move that liquidates a long. Give shorts more room, not less.

Worked example 3 - why 100× is so dangerous

Same BTC long at $60,000, but now at 100×: 60,000 × (1 − 1/100 + 0.005) = 60,000 × 0.995 = $59,700. Liquidation is $300 away - about half a percent. Bitcoin routinely travels that far in a minute for no reason at all. The 100× position that occasionally 10×s someone's money gets screenshotted; the thousands of silent liquidations behind it do not. Over any real sample, that half-percent buffer is a losing game.

Cross margin changes the number

Everything above assumes isolated margin. In cross margin your entire wallet balance backs the position, so your liquidation price sits much further away - the whole balance has to be exhausted, not just the slice assigned to the trade. The trade-off is that one bad cross-margin position can drain the entire account, not just its own margin. Model both modes with the cross-margin calculator, and read the full comparison in cross vs isolated margin.

How to move your liquidation price further away

Once you can calculate the number, you can control it. There are only four levers, and every one buys you more room before the exchange steps in:

• Use less leverage. By far the biggest lever - halving your leverage roughly doubles the distance to liquidation.
• Add margin. Topping up the margin on an isolated position lowers its effective leverage and pushes liquidation back, which helps when a trade goes against you but your thesis is still intact.
• Switch to cross margin, carefully. It moves liquidation much further away by backing the trade with your whole balance - at the cost of risking that whole balance.
• Size from risk, not leverage. A smaller position at the same entry lets you hold the same dollar risk at lower leverage, and lower leverage is what actually pushes liquidation away.

The professional order of operations is to work backwards: decide the most you will lose on the trade, place your stop where the chart justifies it, and let the size and leverage fall out of that - never pick the leverage first.

What the simple formula leaves out

The estimate above is close, but three things make real liquidation arrive slightly sooner than the clean math suggests:

• Fees and funding. Trading fees and the funding you pay while the position is open both drain your margin every cycle, pulling liquidation closer than the price math alone shows.
• Tiered maintenance margin. On very large positions the MMR rises in tiers, so the biggest positions are liquidated a little earlier than a flat 0.5% implies.
• Mark price, not last price. Exchanges liquidate against the mark price - an index-based fair value - not the last trade on that one venue, which protects you from a single manipulated wick but is the number you should actually watch near your level.

Treat the formula as a close, slightly-optimistic estimate and always leave a buffer.

See it with live data

Numbers land harder when you watch them play out. The live liquidations feed shows exactly how much leverage is being wiped out across Binance, Bybit and OKX right now, and every major coin has its own page - BTC, ETH, SOL - with the 24-hour total and the long-versus-short split. Before you commit, drop your entry and leverage into the liquidation calculator, size the trade from your stop with the position-size calculator, and rehearse the whole thing risk-free at the live price on the paper-trading terminal. Learning liquidation with fake money is far cheaper than learning it with your own.