Liquidation (a forced close) happens when a position's margin is no longer enough to keep it open. Understanding the liquidation price is the first step in managing futures risk.
Key terms
- Position value = entry price × quantity.
- Margin = position value ÷ leverage.
- Maintenance margin = position value × maintenance margin rate. The maintenance margin rate depends on the contract and the position tier, and you can find it in the contract details.
- A position is liquidated when "margin + settled funding fees + unrealized PnL" is less than or equal to "maintenance margin + liquidation fee".
Isolated liquidation price (simplified formula)
- Long: liquidation price ≈ (position value − margin) ÷ (quantity × (1 − maintenance margin rate − liquidation fee rate))
- Short: liquidation price ≈ (position value + margin) ÷ (quantity × (1 + maintenance margin rate + liquidation fee rate))
Example
You open a 0.01 BTC long at 80,000 USDT with 10x leverage:
- The position value is 800 USDT and the margin is 80 USDT;
- Assume a maintenance margin rate of 0.5% and a liquidation fee rate of 0.06%;
- Liquidation price ≈ (800 − 80) ÷ (0.01 × (1 − 0.005 − 0.0006)) ≈ 72,400 USDT, about 9.5% below the entry price.
The higher the leverage, the less margin you put up and the closer the liquidation price is to the entry price: the same position at 20x leverage has a liquidation price only about 4.5% below the entry price.
Other things that affect the liquidation price
- Funding fees: in isolated margin, funding is taken from or added to the position margin, so when you have to pay funding, the liquidation price moves closer.
- Adding margin: adding more margin to a position moves the liquidation price further away.
Why liquidation is triggered by the mark price
On Akunosai, liquidation and stop-loss are triggered only by the "mark price". The mark price is calculated with reference to spot prices from several sources, so a wick in the last traded price alone will not directly trigger liquidation (see what a wick is and why liquidation uses the mark price). You can compare every liquidation with the market price in the same second on the Fair Execution page.
Opening a position on the futures demo account and comparing it with the estimated liquidation price on the order panel is more intuitive than reading formulas. To test your risk management, you can also join a demo trading contest.