Crypto liquidation price: how it works and how to calculate it
By Overfit Labs · Updated · Educational only, not financial advice.
When you trade crypto perpetual futures with leverage, the exchange closes your position if losses eat through your margin. The price where that happens is the liquidation price. Knowing it before you enter tells you how much room the trade really has.
What sets the liquidation price
- Leverage: at 10x, a 10% move against you equals your whole margin.
- Maintenance margin rate (MMR): the small slice of the position the exchange requires you to keep. Below it you're liquidated, so liquidation comes a little before your margin is fully gone.
- Margin mode: on isolated margin only this position's margin is at risk. On cross margin the rest of your balance backs the position too, so the liquidation price moves as your balance changes.
- Fees, funding and mark price: these shift the real number a little, and exchanges liquidate on their mark price, not the last trade.
The simplified formula (isolated margin)
Ignoring fees and funding:
- Long: liquidation ≈ entry × (1 − 1/leverage + MMR)
- Short: liquidation ≈ entry × (1 + 1/leverage − MMR)
Worked example with an MMR of 0.5% and an entry of $60,000:
- Long at 10x: 60,000 × (1 − 0.10 + 0.005) = $54,300, a 9.5% drop.
- Short at 10x: 60,000 × (1 + 0.10 − 0.005) = $65,700, a 9.5% rise.
- Long at 5x: 60,000 × (1 − 0.20 + 0.005) = $48,300, a 19.5% drop.
Leverage vs cushion
How far price can move against you before liquidation (MMR 0.5%, before fees):
| Leverage | Room before liquidation |
|---|---|
| 2x | ≈ 49.5% |
| 3x | ≈ 32.8% |
| 5x | ≈ 19.5% |
| 10x | ≈ 9.5% |
| 20x | ≈ 4.5% |
| 50x | ≈ 1.5% |
Crypto often moves 5% or more in a day, so above roughly 10x a normal swing can close you out.
How to use it when planning a trade
- Pick your stop first, from the chart, not from the leverage.
- Check the liquidation price for the leverage you're considering. Your stop must sit well inside it. A stop beyond the liquidation price never fires.
- Size from risk: decide how much of the account you'd lose at the stop, then work out position size from the distance to the stop. Leverage only changes how much margin you post.
- Leave a buffer for fees, funding and wicks on the mark price.
- Practise first on a simulator before using real leverage.
Why your exchange may show a different number
Exchanges use tiered MMRs (larger positions need more), their own mark price, fees and funding, and sometimes a liquidation fee. Treat any calculator as an estimate and check the exchange's own figure before you trade.
Calculate it in Daily Edge
The free liquidation & leverage calculator uses the formula above (side, entry, leverage, margin, MMR and fees) and shows a leverage-to-cushion chart. Size the trade with the position size calculator and practise in Daily Edge Paper, which uses the same simplified model. For practice routines see paper trading crypto with leverage. Nothing here is financial advice.