What Is Liquidation?

Liquidation happens when your margin (collateral) falls below the exchange's minimum requirement. Your position is forcibly closed — you lose your entire margin.

Interactive example: Calculate your liquidation price

Entry price ($)

Leverage (x)

Direction

Liquidation price

—

Move to liquidation

—

Margin lost if liquidated

100%

Leverage vs distance to liquidation

Leverage	Long liq distance	Short liq distance	Risk level
2×	−50%	+50%	Low
5×	−20%	+20%	Moderate
10×	−10%	+10%	High
20×	−5%	+5%	Very High
50×	−2%	+2%	Extreme
100×	−1%	+1%	Gambling

⚠ How to avoid liquidation

Always use a stop-loss above your liquidation price
Keep leverage ≤10× for most trades — lower in volatile markets
Risk only 1-2% of your total capital per trade
Add margin buffer — don't use maximum leverage

→ Full Liquidation Calculator → Safe Leverage Calculator → Position Size Calculator