How Futures Liquidation Works: Liquidation Price Formula, Isolated vs Cross Margin and Margin Tiers
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Futures use margin to control a larger position. When losses approach the margin, the exchange forcibly closes the position — liquidation — so you can't lose more than you put up. Most liquidations aren't caused by picking the wrong direction but by too much leverage, too large a position and no stop-loss. Understanding the liquidation price is lesson one; the basics of perpetuals are in our perpetual futures guide.
Isolated vs cross margin
- Isolated: each position only uses the margin assigned to it. You lose at most that margin, the liquidation price is easy to work out, and you can add margin to push it further away.
- Cross: your whole available balance backs every position. The liquidation price is further away, but liquidation can take the entire account and positions affect each other.
Beginners should use isolated so each position's risk is clear.
Calculating the liquidation price
In isolated mode, liquidation triggers when the remaining margin only covers maintenance margin. Ignoring fees and funding:
Long liquidation price = entry × (1 − 1/leverage) ÷ (1 − maintenance margin rate)
Short liquidation price = entry × (1 + 1/leverage) ÷ (1 + maintenance margin rate)
Example: a 10× BTC long at 60,000 USDT with a 0.5% maintenance margin rate:
- Liquidation = 60,000 × 0.9 ÷ 0.995 ≈ 54,271 USDT, a drop of about 9.55%.
- The same short liquidates at 60,000 × 1.1 ÷ 1.005 ≈ 65,672 USDT, a rise of about 9.45%.
Approximate adverse move a long can take (0.5% maintenance margin):
| Leverage | Liquidated after a drop of about |
|---|---|
| 3× | 33% |
| 5× | 19.6% |
| 10× | 9.5% |
| 20× | 4.5% |
| 50× | 1.5% |
The liquidation calculator does this for you and fills in the maintenance margin rate from OKX's current tiers when you pick a coin. The real liquidation price also depends on fees, funding and added margin — the exchange's figure prevails.
Why bigger positions liquidate sooner
Exchanges set maintenance margin in tiers by position size: bigger positions need a higher maintenance rate and allow lower maximum leverage. At the same 10×, a large position's liquidation price sits closer to entry than a small one's. Major coins have very low first-tier rates; small coins and large positions much higher. The calculator shows each coin's tiers.
Mark price and wicks
Liquidation uses the mark price, not the last trade. The mark price is built from a multi-venue spot index, so a single abnormal trade (a wick) usually won't liquidate you. In fast markets the mark price itself moves quickly, though, and positions sitting close to liquidation still get taken out.
What happens after liquidation
- The exchange takes over the position and closes it at market; any remaining margin is returned.
- If it closes worse than the bankruptcy price, the insurance fund covers the deficit — regular users don't end up owing money.
- If the insurance fund is insufficient, auto-deleveraging reduces profitable opposing positions in ranked order.
How to avoid liquidation
- Use less leverage: 10× liquidates after about a 9.5% adverse move, 3× after about 33%.
- Always set a stop-loss well before the liquidation price. The position size calculator sizes a trade from the maximum loss you accept.
- Keep positions small enough to stay in low maintenance tiers.
- Watch funding: holding the expensive side drains margin over time — see the funding rate table.
- Avoid high-volatility moments: new listings and major data releases trigger wicks.
- Separate funds in cross mode: don't keep long-term holdings in the same cross-margin account as high-leverage trades.
FAQ
How much do I lose when liquidated?
At most the position's margin in isolated mode; potentially your whole available balance in cross mode.
Does adding margin prevent liquidation?
It pushes the liquidation price away, but if the market keeps moving against you, the added margin can be lost too. Be honest about whether you're just doubling down.
Why does the exchange show a different liquidation price from the calculator?
The exchange includes fees, funding already paid or received, tiers, and in cross mode your other positions. The calculator is an estimate.
Are Binance and OKX liquidation rules the same?
The principle is the same; maintenance tiers and some details differ, so large traders should check both.