How to Calculate Futures Liquidation Price
The liquidation price is related to the average entry price of the position, leverage multiple, initial margin rate, and maintenance margin rate.
What is maintenance margin rate?
With different position values, the maintenance margin rates for different types of future contracts vary. For details, visit the Risk Limit page. The maintenance margin rate is determined according to the value of your position and the corresponding risk limit level.
Let's use BTC/USDT perpetual contract as an example
If you hold 10,000 BTC/USDT perpetual contracts with a contract multiplier of 0.001 and a contract price of 28,000, then your position value = position amount × contract multiplier × latest mark price = 10,000 × 0.001 × 28,000 = 280,000 USDT. The corresponding risk limit level is 2 and the maintenance margin rate is 1.4%, so the maintenance margin amount is 280,000 × 0.014 = 3,920 USDT.
What is liquidation price?
To maintain a position, the margin rate of your account must be greater than the maintenance margin rate. If the margin of the position cannot meet the maintenance margin requirements, the position will be forcibly closed.
How to calculate contract liquidation price?
The calculation for the liquidation price of USDT-margined contracts is as follows:
Long position liquidation price = average entry price × [1 - (initial margin rate - maintenance margin rate)]
Short position liquidation price = average entry price × [1 + (initial margin rate - maintenance margin rate)]
Initial margin rate = 1 / leverage multiple
Example
When the BTC/USDT contract price is 28,000 USDT, user A opens a short position with a leverage multiple of 100, and the corresponding maintenance margin rate is 0.4%. The estimated liquidation price of this position = 28,000 × [1 + (1% – 0.4%)] = 28,168 USDT.
The calculation for the liquidation price of coin-margined contracts is as follows:
Long position liquidation price = average entry price / [1 + (initial margin rate - maintenance margin rate)]
Short position liquidation price = average entry price / [1 - (initial margin rate - maintenance margin rate)]
Initial margin rate = 1 / leverage multiple
Example
When the BTC/USD contract price is 28,000 USDT, user A opens a long position with a leverage multiple of 50, and the corresponding maintenance margin rate is 1%. The estimated liquidation price of this position = 28,000 / [1 + (2% – 1%)] = 27,722 USDT.
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