How to Calculate the Liquidation Price for KuCoin Contracts
What is a liquidation price?
To maintain a position, traders must hold a certain proportion of the position's value as margin, known as the maintenance margin ratio.
If the position margin fails to meet the maintenance margin requirement, the position will be forcibly liquidated and the maintenance margin will be lost.
Traders can check the maintenance margin ratio in Contract Details.
How do I calculate the liquidation price for KuCoin Futures?
To calculate the liquidation price for USDT-margined contracts under the isolated margin mode, the formula is as follows:
Long Position: LP = [HP * Vol * S - (IM - MM)] / (Vol * S)
Short Position: LP = [HP * Vol * S + (IM - MM)] / (Vol * S)
Description:
| LP | Estimated liquidation price |
| HP | Holdings price (average price) |
| Vol | Holding volume (lot) |
| S | Contract multiplier, which can be found in Contract Details |
| IM | Initial Margin, which is related to the leverage multiple selected when opening a position IM = HP * Vol * S / Lev (Lev is the leverage ratio) |
| MM |
Maintenance Margin, which is related to the maintenance margin rate MM = HP * Vol * S * MMRate (MMRate is the maintenance margin rate) |
For example, if you open a short position of 5 BTC/USD contracts with a leverage of 100x, where each contract has a multiplier of 0.001 BTC and a value of 28,000, the maintenance margin rate is 0.4%, the corresponding parameters would be:
HP: 28,000, Vol: 5, S: 0.001, IM: 5 * 28,000 * 0.001 / 100 = 1.4, MM: 5 * 28,000 * 0.001 * 0.004 = 0.56
By substituting these parameters, we can calculate the liquidation price: LP = (28,000 * 5 * 0.001 + 1.4 - 0.56) / ( 5 * 0.001) = 28,168
To calculate the liquidation price for coin-margined contracts under the isolated margin mode, the formula is as follows:
Long Position: LP = Vol / [1/HP * Vol + (IM - MM)]
Short Position: LP = Vol / [1/HP * Vol - (IM - MM)]
Description:
| LP | Liquidation price |
| HP | Holdings price (average price) |
| Vol | Holding volume (lot) |
| IM |
Initial Margin, which is related to the leverage multiple selected when opening a position IM = 1/HP * Vol / Lev (Lev is the leverage ratio) |
| MM |
Maintenance Margin, which is related to the maintenance margin rate MM = 1 / HP * Vol * MMRate (MMRate is the maintenance margin rate) |
For example, if you open a long position of 10,000 BTC contracts with a leverage of 50x when the BTC price is 25,000, the maintenance margin rate is 1%, the corresponding parameters would be:
HP: 25,000, Vol: 10,000, IM: 1 / 25,000 * 10,000 / 50 = 0.008, MM: 1 / 25,000 * 10,000 * 0.01 = 0.004
By substituting these parameters, we can calculate the liquidation price: LP = 10,000 / [1 / 25,000 * 10,000 + (0.008 - 0.004)] = 24,752
Maintenance Margin:
The maintenance margin rate for different types of contracts in different positions can be found in Risk Limit.
Based on your position size, the corresponding risk limit level determines the maintenance margin rate. For example, if you hold 10,000 BTC perpetual/USDT contracts at the current BTC price of 28,000, your position size is HP * Vol * S = 10,000 * 0.001 * 28,000 = 280,000.
The risk limit level is 2, the maintenance margin rate is 0.7%, and the maintenance margin amount is 280,000 * 0.7% = 1,960.
Tips:
1. It is recommended to keep leverage within 5x or lower to maintain risk within a reasonable range. When using 100x leverage, the probability of being liquidated increases when price fluctuations approach 0.5%.
2. Pay attention to the gap between the liquidation price and the mark price of your position. When the mark price reaches the liquidation price, it will trigger a forced liquidation.
