Futures Trading

Liquidation and Liquidation Price

Last updated: 12/31/2025
In futures trading, liquidation is an important risk-control mechanism used by the platform. When the actual risk of a position or account exceeds an acceptable threshold, the system will take over the position and automatically execute risk management actions to prevent further losses.
Once liquidation conditions are triggered, the system initiates the liquidation process, which may include: canceling open orders, reducing the risk limit tier, partially reducing positions, or ultimately closing the entire position. The specific trigger conditions and execution logic differ depending on whether the user is using Isolated Margin Mode or Cross Margin Mode.

 

1. Liquidation Mechanism in Isolated Margin Mode

In isolated margin mode, risk is managed on a per-position basis. When the equity of an isolated position reaches the maintenance margin requirement of its corresponding risk tier, liquidation will be triggered.
Maintenance margin rates vary by contract type and position size and can be viewed on the Risk Limit page. The applicable maintenance margin rate is determined based on the position’s opening value and corresponding risk limit tier.

Example

If you hold 10,000 contracts of BTCUSDT Perpetual, with:
  • Contract multiplier: 0.001
  • Average entry price: 30,000 USDT
Opening value = Position size × Contract multiplier × Entry price= 10,000 × 0.001 × 30,000 = 300,000 USDT
This corresponds to Risk Limit Level 1, with:
  • Maintenance margin rate: 0.4%
  • Maintenance margin amount: 300,000 × 0.004 = 1,200 USDT
When your position margin falls below 1,200 USDT, liquidation will be triggered. 

1.1 Trigger Conditions for Isolated Liquidation

A position enters the liquidation process when the mark price reaches the estimated liquidation price. The system will then reduce risk tiers and positions based on the current risk limit level:
  • If the position is at Level 1, the system will directly take over the position and fully liquidate it.
  • If the position is at Level 2 or above, the system will reduce tiers step by step from high to low (e.g., Level 4 → 3 → 2 → 1).
  • At each tier reduction, the system calculates the required position reduction based on the target tier and executes it via IOC orders at the bankruptcy price.
  • If, during the process, the mark price recovers above the estimated liquidation price, the liquidation process will stop.
  • If risk requirements are still not met after reducing to Level 1, the position will be fully taken over and liquidated.

1.2 Liquidation Price Calculation

The isolated liquidation price is determined by factors such as position margin, leverage, and maintenance margin rate.

1.2.1 USDT-Margined Contracts (Long / Short)

Liquidation Price = (Opening Value − Position Margin) / [Position Size × Contract Multiplier × (1 − side × Maintenance Margin Rate − side × Liquidation Fee Rate)]
Where: Long: side = 1、Short: side = −1
Example (USDT-Margined Long Position) Trader A buys 1 BTC at 30,000 USDT with 50× leverage, maintenance margin rate 0.4%:
  • Opening value = 30,000
  • Position margin = 30,000 / 50 = 600
  • Position size = 1 BTC = 1,000 contracts × 0.001 multiplier
Liquidation price = (30,000 − 600) / [1,000 × 0.001 × (1 − 0.4% − 0.06%)] = 29,400 / 0.9954 = 29,535.9 USDT

1.2.2 Coin-Margined Contracts (Long / Short)

Liquidation Price = [Position Size × Contract Multiplier × (1 − side × Maintenance Margin Rate − side × Liquidation Fee Rate)] / (Opening Value − Position Margin)
Where: Long: side = 1、Short: side = −1
Example (Coin-Margined Short Position) Trader B opens 1,000 BTC contracts short at 30,000 USDT with 10× leverage, maintenance margin rate 0.7%:
  • Opening value = 1 / 30,000 × 1,000 = 0.033 BTC
  • Position margin = 0.033 / 10 = 0.0033 BTC
Liquidation price = [1,000 × 1 × (1 − 0.7% − 0.06%)] / (0.033 − 0.0033) = 992.4 / 0.0297 = 33,414 USDT

1.3 Isolated Liquidation Handling Process

Isolated margin uses a tier-reduction + staged position reduction mechanism to minimize user losses while controlling system risk.
Process sequence:
  1. Cancel all open orders for the affected position (only this position, not others).
  2. Reduce the risk tier (e.g., from Level 5 to Level 4).
  3. Re-evaluate position risk based on the new maintenance margin requirements.
  4. Reduce position size as needed using IOC orders at the bankruptcy price.
  5. If the lowest tier is reached and risk is still insufficient, the Insurance Fund takes over.
  6. The Insurance Fund assumes the position at the bankruptcy price.

1.4 Isolated Liquidation Examples

Example 1: Position Not at Level 1, Risk Resolved After One Tier Reduction

Position Info
Item Details
Margin Mode Isolated Margin
Contract BTCUSDT Perpetual
Position Short 2,000 Contracts
Mark Price 40,000 USDT
Current Risk Tier Level 3 (Maintenance Margin Rate: 1.0%)
Next Risk Tier Level 2 (Maintenance Margin Rate: 0.7%)
  • Margin mode: Isolated
  • Contract: BTCUSDT Perpetual
  • Position: Short 2,000 contracts
  • Mark price: 40,000 USDT
  • Current tier: Level 3 (MMR 1.0%)
  • Next tier: Level 2 (MMR 0.7%)
Process
  1. The system takes over the position and cancels open orders.
  2. Tier reduced from Level 3 to Level 2.
  3. Bankruptcy price recalculated (~2,980 USDT).
  4. The system reduces 200 contracts via IOC orders.
  5. Margin ratio returns to safe level (>100%).
Result: Liquidation stops. Position reduced from 500 contracts to 300 contracts.

Example 2: Isolated Liquidation at Level 1 (Full Liquidation)

Position Info
Item Details
Margin Mode Isolated Margin
Contract BTCUSDT Perpetual
Position Short 2,000 Contracts
Mark Price 40,000 USDT
Current Risk Tier Level 1 (Lowest Tier)
  • Margin mode: Isolated
  • Contract: BTCUSDT Perpetual
  • Position: Short 2,000 contracts
  • Mark price: 40,000 USDT
  • Current tier: Level 1 (lowest)
Process
  1. The system cancels all open orders.
  2. No further tier reduction is possible.
  3. Bankruptcy price calculated (~40,420 USDT).
  4. All 2,000 contracts are taken over and liquidated.
Result: The entire position is forcibly closed.

 

2. Liquidation Mechanism in Cross Margin Mode

In isolated margin mode, liquidation occurs when the mark price reaches the liquidation price.In cross margin mode, positions are only liquidated when the risk ratio reaches 100%.The cross liquidation price is for reference only and does not directly trigger liquidation.

2.1 Cross Margin Liquidation Trigger

When Risk Ratio ≥ 100%, the account enters liquidation.
Calculation of Risk Rate
(Sum of the maintenance margin for cross-margin positions + Maintenance margin for anticipated open order execution + Expected closing fees) / (Total cross-margin position margin - Expected opening fees)
Example:
User Positions and Open Orders Risk Rate
Assuming your total margin in the cross margin account is 5,000 USDT, the account currently contains the following positions and open orders:
Open Position
You currently hold a long position in the BTCUSDT perpetual contract with the following details:
BTCUSDT contract mark price: 62,000 USDT
BTCUSDT contract position size: 100 contracts (contract multiplier: 0.001 BTC)
Maintenance margin rate for the BTCUSDT contract: 0.5%

Open Order
At the same time, there is an open sell (short) order for the ETHUSDT perpetual contract in the account with the following details:
ETHUSDT contract mark price: 3,000 USDT
ETHUSDT open order size: 1,000 contracts (contract multiplier: 0.01 ETH)
Maintenance margin rate for the ETHUSDT contract: 0.8%

Fee Information
Applicable taker fee rate: 0.06%

At this point, your account’s risk ratio =
(62,000 * 0.001 * 100 * 0.5% + 3,000 * 0.01 * 1,000 * 0.8% + 62,000 * 0.001 * 100 * 0.06% +

3,000 * 0.01 * 1,000 * 0.06%) / (5,000 – 3,000 * 0.01 * 1,000 * 0.06%) = 5.88%

2.2 Cross Margin Liquidation Price Calculation

One-Way Position Mode

  • Liquidation Price of USDT-Margined Contracts

    • = (Mark Value − |Mark Value| × AMR) / (1 − side × MMR − side × taker fee rate) / Position Size

  • Liquidation Price of Coin-Margined Contracts

    • = Position Size / (Mark Value − |Mark Value| × AMR) / (1 − side × MMR − side × taker fee rate)

Where:
  • AMR = Total cross margin / Σ |Mark Value|
  • IMR / MMR can be viewed in positions or via API
  • long side = 1, short side = −1
User Positions Liquidation Price
Assume you hold a BTCUSDT Perpetual long position and an ETHUSDT Perpetual short position

BTCUSDT Perpetual Contract
Current mark price: 62,000 USDT
Contract multiplier: 0.001
Position size: 10 contracts
Maintenance margin rate (MMR): 0.5%
Taker fee rate: 0.06%

ETHUSDT Perpetual Contract
Current mark price: 3,800 USDT
Contract multiplier: 0.01
Position size: −100 contracts
Maintenance margin rate (MMR): 1%		 AMR = 1000 / (62,000 × 0.001 × 10 + 3,800 × 0.01 × 100) = 22.62%

BTCUSDT Contract Liquidation Price
= (62,000 × 0.001 × 10 − 62,000 × 0.001 × 10 × 22.62%) / (1 − 0.5% − 0.06%) / (0.001 × 10)
= 47,956

ETHUSDT Contract Liquidation Price
= (3,800 × 0.01 × −100 − abs(3,800 × 0.01 × −100) × 22.62%) / (1 + 1% + 0.06%) / (0.01 × −100)
= 4,610.7

Hedge Mode (Dual-Side Positions)

  • Liquidation Price of USDT-Margined Contracts = [Long Mark Value + Short Mark Value − AMR × |Dominant Side Mark Value|] / [Long Size + Short Size − max(Long Size, −Short Size) × MMR − (Long Size − Short Size) × liquidation fee rate]
Liquidation Price of Coin-Margined Contracts = [max(−Long Size, Short Size) × (MMR + liquidation fee rate) + min(−Long Size, Short Size) × liquidation fee rate − Long Size − Short Size] / [|Dominant Side Mark Value| × AMR − Long Mark Value − Short Mark Value]
  • AMR = Total cross margin / Σ |Single-contract dominant side mark value|
  • Dominant side mark value = max(Long Size, −Short Size) × Mark Price
  • Long size is positive, short size is negative

2.3 Cross Margin Liquidation Process

Cross margin liquidation is an account-level risk control and follows a stricter process.

2.3.1 Risk Warning (Risk Ratio ≥ 95%)

  • The system cancels all open orders across all contracts (including isolated orders).
  • If risk ratio remains ≥100% after cancellation → liquidation begins.

2.3.2 Liquidation (Risk Ratio ≥ 100%)

  1. Cancel orders (already executed).
  2. Net off all hedged positions across contracts.
  3. System takes over positions based on MMR; large positions may be partially reduced.
  4. Close positions using IOC orders at the bankruptcy price.
    1. If multiple contracts exist, the system prioritizes reducing contracts with higher position value.
  5. During liquidation, user trading operations will be temporarily restricted.

 

 

 

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