How liquidation price works on perpetual futures

When you trade perpetual futures with leverage, there's a price at which the exchange closes your position for you and keeps your margin. That's your liquidation price. Knowing roughly where it is, before you enter, is one of the simplest ways to avoid a very bad day.

What liquidation is

With leverage, you only put up part of the position's value as margin. At 10× leverage, a $1,000 position needs $100 of margin.

As the price moves against you, your losses come out of that margin. The exchange also requires you to keep a small minimum in the position, called the maintenance margin. When your remaining margin falls to that level, the exchange closes the position to stop the loss from exceeding what you put up. On most exchanges you lose the margin and may pay a liquidation fee on top.

The rough formula

For an isolated margin position, ignoring fees and funding, a good first estimate is:

Long: liquidation ≈ entry × (1 − 1 ÷ leverage + maintenance margin rate)

Short: liquidation ≈ entry × (1 + 1 ÷ leverage − maintenance margin rate)

In plain words: at 10× leverage, a 10% move against you would wipe out your margin. The maintenance margin means you're closed out a little before that.

Worked example

Entry at 60,000, with a 0.5% maintenance margin rate:

Leverage	Long liquidates near	Short liquidates near	Move against you
2×	30,300	89,700	49.5%
5×	48,300	71,700	19.5%
10×	54,300	65,700	9.5%
20×	57,300	62,700	4.5%
50×	59,100	60,900	1.5%
100×	59,700	60,300	0.5%

The move against you that triggers liquidation is roughly 1 ÷ leverage minus the maintenance margin. At 100×, half a percent is enough, which BTC can move in seconds.

The rule that matters: liquidation beyond your stop

Your stop loss is where you decided the trade is wrong. Your liquidation price is where the exchange decides for you, at a much worse price for you. If liquidation comes before your stop, the stop never gets a chance to work.

Say you go long at 60,000 with a stop at 59,400, a 1% stop:

• 10×: fine. Liquidation is near 54,300, and the stop at 59,400 is hit long before that.
• 50×: risky. Liquidation is near 59,100, just 300 below your stop. Slippage or a sharp wick could get you there.
• 100×: broken. Liquidation is near 59,700, above your stop. You'd be liquidated before the stop is reached.

A useful habit: size the position from your stop first (see how to calculate position size), then choose a leverage low enough that liquidation sits comfortably beyond the stop. Higher leverage doesn't let you "risk less". The loss at your stop is the same at 5× or 50×. It only reduces the margin you lock up and brings liquidation closer.

Why the exchange's number is different

The formula above is an estimate. Your exchange's liquidation price can differ because of:

• Tiered maintenance margin: larger positions need a higher maintenance margin rate, which moves liquidation closer.
• Fees: some exchanges set aside the closing fee, which moves liquidation slightly closer.
• Funding: funding payments add to or take from your margin while you hold.
• Cross margin: in cross mode your whole balance backs the position, so liquidation is usually further away. But a bad trade can then take more than the margin you meant to risk.
• Mark price: liquidation uses the exchange's mark price, not the last traded price.

Always check the liquidation price the exchange shows before you confirm an order.

Checklist before you enter

• Stop placed where the idea is wrong, and size worked out from it.
• Leverage chosen after the size, not before.
• Liquidation price well beyond the stop, with room for slippage.
• Margin comfortably below your available balance.

TradeTurtle's planner shows a rough liquidation price for every trade and warns you when liquidation comes before your stop or sits very close to your entry. It's an estimate using the formula above, so use it as a guard rail and confirm with your exchange.