Frequently Asked Questions
What is a liquidation price?
The price at which your exchange force-closes your leveraged position because your margin is no longer sufficient. Your collateral is used to cover losses, and any remaining margin (minus fees) is returned.
How is liquidation calculated for longs?
Liquidation Price = Entry × (1 - 1/Leverage + MMR). With 10x at $60,000 entry and 0.5% MMR, liquidation is ~$54,300 — a 9.5% price drop.
Isolated vs cross margin?
Isolated uses only the allocated margin — max loss is capped. Cross margin uses your whole balance as collateral, giving a further liquidation price but risking your entire account.
How does leverage affect liquidation?
Higher leverage = closer liquidation. 2x needs ~50% drop to liquidate. 100x needs only ~1%. The margin decreases proportionally, giving less buffer against adverse moves.
Can I prevent liquidation?
Use lower leverage, set stop-losses above liquidation, add margin before liquidation triggers, or use cross margin. Never risk more than 1-2% of account per trade.