At what price does a leveraged long or short reach its simplified liquidation level?
A liquidation estimate combines entry price, leverage, maintenance margin and position direction. The long and short relationships move in opposite directions because adverse price movement is below entry for one and above entry for the other.
Direction, leverage and maintenance margin
Equity = Entry × Quantity ÷ Leverage + Added margin − CostsLong = (Entry × Quantity − Equity) ÷ [Quantity × (1 − MMR)]Short = (Entry × Quantity + Equity) ÷ [Quantity × (1 + MMR)]A simplified long or short estimate
The default setup applies the formula’s leverage and maintenance-margin terms to the entered position direction. It reports the estimated liquidation price and distance from entry.
Illustrative inputs; currency amounts below use USD. Rates and prices are assumptions, not live quotes.
- Entry price
- $61,000.00
- Position quantity (coins / units)
- 1
- Leverage (×)
- 10
- Maintenance margin rate
- 0.5%
- Additional isolated margin
- $0.00
- Fees and funding deducted from margin
- $0.00
Step-by-step calculation
- Initial margin = 61,000 ÷ 10 = 6,100. Equity after additional margin and costs = 6,100.
- Long threshold = (61,000 − 6,100) ÷ [1 × (1 − 0.005)] = 55,175.879397.
- Short threshold = (61,000 + 6,100) ÷ [1 × (1 + 0.005)] = 66,766.169154. Exchange tiers and closing-fee reserves are excluded.
Intermediate figures are rounded for reading. Results use the full calculation precision.
Why leverage pulls liquidation closer
Higher leverage generally moves the liquidation estimate closer to entry. Maintenance margin also reduces the price distance available before the simplified threshold.
Exchange rules that change the live figure
Exchange engines include fees, funding, margin mode and tiered maintenance rules. Their displayed liquidation price can therefore differ from this transparent estimate.
- The position uses the direction and simplified relationship shown in the formula.
- Leverage and maintenance margin remain constant.
- Added isolated collateral and paid costs are included; cross margin, closing-fee reserves and exchange tiers are excluded.
Calculations related to liquidation price
The following tools examine neighbouring parts of the same calculation without changing the inputs or assumptions used above.
References
Sources and conventions
- Bybit: liquidation rules by margin mode
An example of exchange-specific rules. Our simplified thresholds do not implement Bybit's liquidation engine or any exchange's current contract rules.
Quick answers
Frequently asked questions
Why does the exchange show a different liquidation price?
Exchanges use venue-specific risk tiers, maintenance deductions and fee reserves. This tool holds the maintenance rate constant and does not import account data. Enter your applicable rate and compare the estimate with the exchange.
Does liquidation use mark price or last traded price?
Many perpetual venues trigger isolated liquidation using mark price, which can differ from the last traded price. Check the rules for your contract; a last-price chart or stop trigger may not track liquidation.
Does this calculate cross-margin liquidation?
No. Cross margin depends on account collateral, other positions and their unrealised P&L. The inputs here represent one isolated linear position.
What does zero long liquidation mean?
If allocated equity covers the entire long position, this simplified model has no positive liquidation price. Zero is a model boundary, not a guarantee against exchange actions or other account risks.
Can adding margin prevent liquidation?
It moves the modelled threshold further from entry while increasing the capital exposed. Use the reverse calculation to estimate the total additional margin for a chosen threshold; it cannot guarantee execution or protection.
Calculation method and limitations · Report an error
Educational content only. This guide is not financial advice.