What Is Liquidation Price? How to Calculate It for Long and Short

Author: Crypffalo Research · 07:00 04/10/2026

Liquidation price and maintenance margin (MMR) explained, with formulas for Long and Short, BTC examples from 5x to 100x leverage and 5 ways to avoid liquidation.

What Is Liquidation Price? How to Calculate It for Long and Short

Liquidation price is the most important number a futures trader needs to know before opening a position, because if price reaches it the exchange closes the position automatically and you lose almost all your margin. This article explains what liquidation price is, the estimation formulas for Long and Short positions, concrete examples at each leverage level and how to avoid getting your account "wiped out".

Quick summary

Liquidation price is the price at which a position's margin falls to the maintenance margin level, and the exchange automatically closes the position.
The higher the leverage, the closer the liquidation price is to your entry: at 10x, a move of about 9.5% against you gets you liquidated; at 50x, only about 1.5%.
Estimation formula (isolated margin, excluding fees): Long ≈ Entry price × (1 − 1/Leverage + MMR), Short ≈ Entry price × (1 + 1/Leverage − MMR).
Track positions just liquidated across exchanges on the Real-time Crypto Liquidations page.

1. What is liquidation price?

When you trade leveraged futures contracts, you only put up part of the position size, called margin. For example, a 10,000 USD position at 10x leverage needs only 1,000 USD in margin.
If price moves against you, losses are deducted from your margin. When the remaining margin falls to the maintenance margin, the exchange liquidates the position to protect the system.
The price at which this happens is called the liquidation price. Exchanges always show it on the order screen and in your open positions.

2. What is maintenance margin (MMR)?

MMR (maintenance margin rate) is the minimum margin ratio you must maintain. On Binance Futures, MMR depends on the trading pair and position size: the larger the position, the higher the MMR (for example, in Binance's documentation a 264,000 USDT BTCUSDT position uses an MMR of 1%).
On Hyperliquid, maintenance margin is set at half the initial margin at the coin's maximum leverage.
Because MMR varies between exchanges and position tiers, the formulas below are only estimates. The most accurate figure is always the one your exchange displays.

3. Formula to estimate liquidation price

Long position: Liquidation price ≈ Entry price × (1 − 1/Leverage + MMR)
Short position: Liquidation price ≈ Entry price × (1 + 1/Leverage − MMR)
These formulas apply to isolated margin mode and exclude trading fees and funding. With cross margin, your entire wallet balance is used to absorb losses, so the liquidation price is further away, but if you do get liquidated you can lose more.

4. Example with BTC at a 100,000 USD entry (assuming 0.5% MMR)

5x leverage: Long liquidated around 80,500 USD (a drop of about 19.5%); Short liquidated around 119,500 USD.
10x leverage: Long around 90,500 USD (down 9.5%); Short around 109,500 USD.
20x leverage: Long around 95,500 USD (down 4.5%); Short around 104,500 USD.
50x leverage: Long around 98,500 USD (down only 1.5%); Short around 101,500 USD.
100x leverage: Long around 99,500 USD: a normal 0.5% candle is enough to liquidate the position.
The table above shows why most liquidated positions use high leverage.

5. Check whale liquidation prices to find "hot" price zones

On Hyperliquid, every wallet's liquidation price is public. In the Whale Positions tab, the table of the 50 largest positions has a Liquidation column; click the column header to sort the positions closest to liquidation to the top.
The By Coin tab shows the entry price and liquidation price of every whale wallet in a specific coin.
When price approaches the liquidation zone of many large positions, the market often sees a sharp "sweep". You can watch it as it happens on the Real-time Liquidations page.

6. 5 ways to avoid liquidation

Use low leverage (3x–5x for beginners), so your liquidation price stays far from your entry.
Always set a stop loss before the liquidation price. Cutting a loss proactively costs far less than getting liquidated.
Size positions by risk, for example losing at most 1–2% of capital per trade if the stop loss is hit. Use Crypffalo's position size calculator and PnL calculator.
Avoid opening positions right before major news such as CPI, FOMC or Nonfarm Payrolls. Check the Economic Calendar (GMT+7).
Watch funding and crowd sentiment. When too many traders are on the same side, price is prone to sweep the other way. Read more in How to read the Long/Short Ratio, Funding rate and Open Interest.

Conclusion

Understanding liquidation price helps you choose sensible leverage and stop losses instead of letting the exchange "close it for you". To see what big money is doing, read What are whale wallets and how to track them.

This content is for informational purposes only and is not financial advice. Leveraged trading carries the risk of losing your entire capital.

Tags: Liquidations, Futures, Crypto Knowledge, Risk Management, Guides

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