Liquidation Price Calculator

In leveraged trading, liquidation is the automatic forced closure of your position by the exchange when your losses consume your entire initial margin deposit. Understanding your liquidation price before entering a trade is one of the most important risk management steps you can take.

How leverage works

When you trade with 10× leverage, you deposit 10% of the trade value as collateral (called the initial margin). The exchange lends you the rest. A 10% move against you wipes out that entire deposit, and that is your liquidation point.

Initial Margin % = 1 ÷ Leverage

Liquidation price formulas

For a Long position (you profit if price goes up):

Liquidation Price = Entry Price × (1 − Initial Margin % + Maintenance Margin %)

For a Short position (you profit if price goes down):

Liquidation Price = Entry Price × (1 + Initial Margin % − Maintenance Margin %)

Where:

• Initial Margin % = 1 ÷ Leverage (e.g., 0.10 for 10×)
• Maintenance Margin % = minimum margin before liquidation triggers (typically 0.5% on Binance/Bybit for major pairs)

Worked example

BTC entry: $40,000, leverage: 10×, direction: Long, maintenance margin: 0.5%

Initial Margin % = 1 ÷ 10 = 10% Liquidation = $40,000 × (1 − 0.10 + 0.005) = $40,000 × 0.905 = $36,200

A drop of just $3,800 (9.5%) from entry triggers full liquidation.

Liquidation danger by leverage level

The two columns match, and that is not a mistake. The distance to liquidation is your initial margin minus the maintenance margin, which is the same figure whichever way you are positioned: at 10× you post 10%, the exchange keeps 0.5% back, and 9.5% of adverse movement is all you have. Maintenance margin always shortens the distance, so it is subtracted for a long and for a short alike.

Real exchanges add wrinkles this table does not model. Maintenance margin is tiered, rising as your position gets larger, and if you hold other positions in a cross-margin account their unrealized profit can extend your survival. Isolated margin on a single position behaves close to the numbers above.

Maintenance margin vs initial margin

• Initial margin is what you deposit to open the position.
• Maintenance margin is the minimum balance required to keep it open, usually 0.4% to 0.5% of position value on major exchanges for the smaller position tiers.
• When your account balance falls to the maintenance margin level, liquidation is triggered.

Partial vs full liquidation

Most large exchanges (Binance, Bybit) use partial liquidation first, closing only part of your position to bring the margin back above the maintenance level. If the price keeps moving against you, further partial liquidations follow until the position is fully closed.

The danger of cascade liquidations

On May 19, 2021, Bitcoin fell roughly 30% intraday. The drop triggered billions in liquidations, which forced sales that drove the price down further, which triggered more liquidations. Around $8 billion in positions were wiped out across that day, several billion of it inside the worst hour, in what is known as a liquidation cascade. The lesson for anyone sizing a position: your liquidation price is not a promise. In a cascade the order book thins out, and a forced market sell can fill well below the level you calculated.

How to protect yourself

• Always use a stop loss set well before your liquidation price
• Lower leverage significantly (2–5× is manageable; 20×+ is speculation, not trading)
• Never risk more than 1–2% of your account on a single trade
• Add margin if the trade moves against you (if you still believe in the setup)