Published
I've seen this mistake more times than I can count — on forums, in trading groups, in my own positions. Trader opens a 50x long, sets a 3% stop loss, and feels protected. They aren't. At 50x, the exchange liquidates them at around 1.5% below entry. The 3% stop is set deeper than that. It will never fire. They don't get stopped out. They get liquidated.
The stop loss exists below the liquidation price, which means the exchange takes the position before the stop order is ever reached.
The math that makes this happen
Liquidation happens when your margin is consumed. For a leveraged long, the approximate liquidation distance from entry is:
liq distance ≈ (1 / leverage) − maintenance margin rate
On Bybit, maintenance margin for BTC at 50x is typically around 0.5%. So:
- 50x: 1/50 − 0.005 = 0.020 − 0.005 = 1.5% from entry
- 25x: 1/25 − 0.005 = 0.040 − 0.005 = 3.5% from entry
- 18x: 1/18 − 0.005 = 0.056 − 0.005 = 5.1% from entry
- 10x: 1/10 − 0.005 = 0.100 − 0.005 = 9.5% from entry
Now set a 3% stop loss and see what happens:
| Leverage | Liq distance | 3% stop | Result |
|---|---|---|---|
| 50x | 1.5% | 3.0% | ❌ Stop past liq — never fires |
| 25x | 3.5% | 3.0% | ✅ Stop inside liq — works |
| 18x | 5.1% | 3.0% | ✅ Stop inside liq — works |
| 10x | 9.5% | 3.0% | ✅ Stop inside liq — works |
At 50x, a 3% stop is worthless. You need it inside the 1.5% window — something like 1.0% to 1.2% — or you have no protection at all.
Concrete example
BTC entry at $50,000, 50x long, cross margin off (isolated).
- Liquidation price: $50,000 × (1 − 0.015) = $49,250
- Your 3% stop: $50,000 × (1 − 0.03) = $48,500
- The stop sits $750 below the liquidation price
- Price falls to $49,250 → you're liquidated. Stop at $48,500 never triggers.
You thought you had a 3% cushion. You had 1.5%. The extra 1.5% was an illusion.
The practical fix
Before entering, know your liquidation price. Then set your stop between entry and liquidation — not past it. At 50x, that means a maximum stop loss of about 1.0–1.2% (leaving some buffer for spread and slippage). If that feels too tight to trade on, the answer isn't to widen the stop. The answer is to lower the leverage until the stop fits.
A position where your stop can't realistically be set inside the liquidation window isn't a trade with a stop loss. It's a bet on direction with the exchange as your backstop.
Why people don't notice
Most platforms let you set a stop anywhere. They don't warn you if it's past liquidation. The order sits there, confirmed, looking protective. Until price drops 1.5% and the position vanishes. Then traders blame the exchange for "stop hunting" when the actual problem was a stop order that was never going to fire.
Check the gap before every leveraged trade. The SL vs liquidation gap calculator tells you in one click whether your stop is inside the protection zone or past it. And if you're sizing the trade, pair it with the position size calculator — a stop that's useless means you're sizing on false assumptions.