Liquidation Price: The Formula, With Worked Examples
How to calculate liquidation price for long and short perps, isolated and cross margin, with worked BTC and gold examples at 3x, 5x, 10x and 20x leverage.
By SorooshX R&D Team4 min read
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An isolated long is liquidated at entry × (1 − 1/L) ÷ (1 − m) and an isolated short at entry × (1 + 1/L) ÷ (1 + m), where L is leverage and m is the maintenance margin rate. A 10x BTC long opened at 82,180 with a 1.25% maintenance rate is liquidated near 74,898, which is 8.86% below entry.
The rest of this page shows where the formula comes from, works it through at four leverage levels, and covers the three reasons real liquidations come earlier than the maths says.
Where the liquidation price formula comes from
A position is liquidated when its equity falls to the maintenance requirement. Everything else follows from that one line.
Take an isolated long of size q at entry price E, with leverage L:
- Initial margin: M = q × E ÷ L
- Equity at price P: M + q × (P − E)
- Maintenance requirement at price P: m × q × P
Set equity equal to the requirement and solve for P:
Long: P_liq = E × (1 − 1/L) ÷ (1 − m) Short: P_liq = E × (1 + 1/L) ÷ (1 + m)
Two things fall out of this. First, the distance to liquidation is roughly 1/L minus the maintenance rate. At 10x you have about 10% of room minus about 1.25%, which gives the 8.86% above. Second, the maintenance rate matters more as leverage goes up, because it takes a bigger share of a smaller buffer.
Worked example 1: BTC long at four leverage levels
Entry 82,180.20 (radar, 19 Oct 2026, 11:14 UTC). Maintenance rate assumed at 1.25%.
| Leverage | Liquidation price | Distance from entry |
|---|---|---|
| 3x | 55,480 | −32.5% |
| 5x | 66,576 | −19.0% |
| 10x | 74,898 | −8.9% |
| 20x | 79,059 | −3.8% |
At 20x, a 3.8% move takes the position out. BTC can move that much in a quiet session. That is why we treat 20x on a major as a short-term trade, not a position you hold. Check how often BTC moves 4% in a day on the BTC chart before you pick a leverage.
Worked example 2: BTC short at 10x
Same entry, same 1.25% rate:
P_liq = 82,180 × 1.1 ÷ 1.0125 = 89,282, or 8.64% above entry.
A short gets slightly less room than a long at the same leverage (8.64% vs 8.86%). The maintenance requirement grows as price rises against a short, so it eats into the buffer faster.
Worked example 3: gold perp long at 10x
Entry 4,175.10 (radar, 19 Oct). Assume a higher 2.5% maintenance rate, which is typical for a less liquid market:
P_liq = 4,175.10 × 0.9 ÷ 0.975 = 3,853.94, or 7.69% below entry.
Same 10x leverage as the BTC example, but more than a full point less room, all from the maintenance rate. When you trade gold on-chain, read the maintenance rate in the SorooshX order panel before you size the trade, not after.
Isolated vs cross margin
The examples above are isolated: only the margin you put on that position can be lost, and the liquidation price is fixed unless you add margin.
On cross margin, your whole free balance backs every open position. Example: $2,000 account equity, long 0.1 BTC at 82,180 (notional $8,218, effective leverage about 4.1x), maintenance rate 1.25%.
Liquidation is when 2,000 + 0.1 × (P − 82,180) = 0.0125 × 0.1 × P, which solves to P ≈ 62,967, or 23.4% below entry.
That's far more room than the 10x isolated position, because the account is really running about 4x. The cost is that if it does hit, the whole $2,000 goes, not just one position's margin. Losses on other cross positions also pull this liquidation price closer, even if BTC doesn't move.
Track the levels that matter to you: add BTC and the pairs you trade to your watchlist and set your alerts above your liquidation price, not at it.
Why real liquidations come early
The formula gives the price where equity equals maintenance in a clean world. Three things move it closer:
- Fees. Opening fees come out of margin straight away, so a 10x position starts with less than 10% of room.
- Funding. If you're on the paying side, every funding payment reduces margin. On 19 Oct, BTC and ETH funding was +11.0% APR, so longs were paying. Funding is charged on notional, not margin, so at 10x that rate costs about 110% of your margin over a year, or roughly 9% a month. It barely matters on a day trade and moves your liquidation price on a multi-week hold.
- Mark price, not last price. Venues liquidate on a mark price built from several sources. That protects you from a single-venue wick, but it also means your chart's last trade can look safe while the mark price is already through your level.
A desk rule of thumb
We size so the liquidation price sits beyond the level that would invalidate the trade anyway. If our invalidation on a BTC long is a daily close below 80,000, a 20x position (liquidation 79,059) is too tight: normal noise around the level can take it out before the close confirms anything. At 10x (liquidation 74,898), the trade is closed by our stop, not by the venue.
If you'd rather not watch margin by hand, you can automate this with an agent that sizes and stops each position under rules you set.
Market commentary, not investment advice. Leveraged products can lose more than your margin.
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Frequently asked questions
How do you calculate liquidation price for a long?
For an isolated long: liquidation price = entry × (1 − 1/leverage) ÷ (1 − maintenance margin rate). At 10x with a 1.25% maintenance rate, a BTC long from 82,180 liquidates near 74,898.
Does adding margin move my liquidation price?
Yes. More margin means lower effective leverage, so the liquidation price moves further from the market. On cross margin, all free balance in the account counts, which is why cross positions liquidate later but can take the whole account.
Why was I liquidated before my calculated price?
Fees, negative funding payments and unrealised losses on other cross positions all eat margin. Liquidation also triggers on the mark price, not the last traded price, so a wick on one venue isn't what counts.