How to Calculate Your Liquidation Price: When the Exchange Closes Your Leveraged Position

The liquidation price is the level at which your trading platform closes a leveraged position without asking, because the collateral you posted no longer covers the accumulated loss. You need that single number before you enter, not afterwards. For a long position it can be estimated in one line: liquidation price ≈ entry price × (1 − 1 ÷ leverage + maintenance margin rate). With an entry at $77,000, ten times leverage and a maintenance margin rate of 0.5 percent, the liquidation price works out at roughly $69,685, or 9.5 percent below the entry. The rest of this article explains where each part of that formula comes from, why your exchange shows a slightly different figure, and which running costs squeeze the buffer further. What Is a Liquidation Price in Crypto Trading? Opening a leveraged position means borrowing buying power. You put up an amount as margin, the exchange supplies the rest, and the position moves at full size. Margin is simply the collateral you post for that one trade. If the price runs against you, that amount melts away. The liquidation price marks the point at which it has melted so far that the exchange will no longer carry the risk. The term liquidation des...