Published
The short version
When you open a leveraged futures position, you deposit margin (collateral). That margin covers losses as price moves against you. When the losses eat through all your margin, there's nothing left to cover further loss — so the exchange closes your position automatically. That's liquidation.
You don't owe money after liquidation (on most exchanges). But you lose your entire margin. At high leverage, that can happen after a surprisingly small price move.
How much does price need to move to liquidate you?
The higher your leverage, the less room you have. Here's how much price needs to move against your position before liquidation (with 0.5% maintenance margin, typical for major exchanges):
| Leverage | % move to liquidation (long) | Example: BTC at $100,000 |
|---|---|---|
| 3x | ~32.8% | Liquidated below ~$67,200 |
| 5x | ~19.5% | Liquidated below ~$80,500 |
| 10x | ~9.5% | Liquidated below ~$90,500 |
| 20x | ~4.5% | Liquidated below ~$95,500 |
| 25x | ~3.5% | Liquidated below ~$96,500 |
| 50x | ~1.5% | Liquidated below ~$98,500 |
| 100x | ~0.5% | Liquidated below ~$99,500 |
At 100x leverage, a single 0.5% candle wipe wipes your margin. BTC moves 0.5% every few minutes during active sessions.
The exact liquidation price formula
Most perpetual futures exchanges use a simple margin-based formula:
Long position: Liq price = Entry × (1 − 1/Leverage + MM%)
Short position: Liq price = Entry × (1 + 1/Leverage − MM%)
Where MM% is the maintenance margin rate (usually 0.5% = 0.005 for major coins on Bybit and Binance).
Liq price = $100,000 × (1 − 0.10 + 0.005) = $100,000 × 0.905 = $90,500
For shorts, price needs to rise above the liquidation price instead. A BTC short at $100,000 with 10x: $100,000 × (1 + 0.10 − 0.005) = $109,500.
Use the RektCalc liquidation calculator to get your exact number instantly — including partial liquidation scenarios.
Cross margin vs isolated margin: which is riskier?
The margin mode you choose fundamentally changes how liquidation works:
| Feature | Isolated margin | Cross margin |
|---|---|---|
| Margin at risk | Only what you assigned to that position | Your entire account balance |
| Liquidation price | Fixed — based on assigned margin only | Lower (further away) — whole account as buffer |
| If liquidated | Lose the assigned margin, rest of account safe | Lose the entire account balance |
| Best for | Risk-controlled speculative trades | Hedging, experienced traders only |
Most beginners should use isolated margin — you can only lose the margin you put into that position. Cross margin is for experienced traders who understand that one bad trade can drain their whole account.
Why your liquidation price isn't fixed
Several things can change your liquidation price after you open a position:
- Adding margin — depositing more margin to a position pushes the liquidation price further away.
- Funding rates — in perpetual futures, funding payments are debited from your margin every 8 hours. A long position paying 0.05% funding every 8h (~54%/year) drains margin over time, gradually bringing the liquidation price closer to the current price. Use the funding rate calculator to see this effect.
- Partial close — reducing position size releases margin and changes the liquidation price.
- Cross margin — any loss elsewhere in the account affects the shared margin pool.
Long liquidation vs short liquidation
The mechanics are mirrored:
- Long liquidation: price falls below your liquidation level. You bet on price rising, but it dropped far enough that margin ran out.
- Short liquidation: price rises above your liquidation level. You bet on price falling, but it surged.
A common trap: shorting into a short squeeze. When many traders are short, a rising price triggers cascading short liquidations which fuel further price increases — a self-reinforcing cycle. The RektCalc market dashboard shows long/short ratios so you can see when a squeeze is likely.
The three ways to avoid liquidation
1. Use lower leverage. At 5x, price needs to move 19.5% against you. At 25x, only 3.5%. For most crypto assets, 3–5% intraday moves are routine — 25x leaves no room.
2. Always set a stop-loss above (below) the liquidation price. Your stop-loss should trigger well before you reach liquidation — not as a backup, but as your primary exit. A stop at -5% protects you from a -10% liquidation. Use the position size calculator to size trades so that a -5% stop costs only 1% of your account.
3. Never average down into a losing leveraged position. Adding margin or opening new positions in the same direction as a loser to "lower your average" is the fastest path to a full wipe. Your liquidation might move further away, but your total exposure and potential loss grows.
What happens to your money when you're liquidated?
On most major exchanges (Bybit, Binance, OKX):
- When your margin hits the maintenance margin level, the exchange takes over the position.
- The position is closed at the best available market price.
- Any remaining margin after fees goes to the exchange's insurance fund.
- If the price moves so fast that the position closes below zero (auto-deleveraging), other traders on the winning side may have their profits capped.
You don't lose more than your margin in isolated mode. In cross margin, your full balance is at risk.
Related calculators
Every calculation from this article, built into a free tool:
- Liquidation price calculator — any leverage, any coin, long or short
- Leverage table — see all leverages at once
- Bybit liquidation calculator — Bybit-specific maintenance margin rates
- Binance liquidation calculator — Binance-specific rates
- OKX liquidation calculator
- Funding rate impact calculator — how funding erodes margin over time
- Position size calculator — size trades from risk, not emotion
- Rekt Risk Score — combined risk assessment for your trade setup