Liquidation price

The price at which a leveraged position's equity falls below the maintenance margin and the protocol force-closes some or all of it. It is an estimate that moves as fees accrue and as collateral is added or drawn down.

Definition

The liquidation price is the level at which your position stops being yours to manage. Once the mark price reaches it, your equity no longer covers the maintenance margin, and the protocol closes the position rather than letting the loss deepen.

What moves it

The number shown when you open a position is not fixed. Three things push it around while the position is live.

Fees accrue. Funding payments and borrow fees are deducted from your collateral, and less collateral means a nearer liquidation price. A position held long enough can drift into liquidation on cost alone, without the price ever reaching the level you were watching.

Collateral changes. Adding margin moves the price further away, withdrawing it moves it closer, and a partial close moves it in whichever direction the keep leverage setting dictates.

And under cross margin, other positions change it. Losses elsewhere consume shared collateral, so a trade you are not looking at can pull this one closer to its limit.

Why it is an estimate

The displayed figure assumes the fees stop where they are and nothing else in the account changes. Neither assumption holds. Treat it as the current best guess, recalculated continuously, rather than a guaranteed floor.

What happens at the price is not what you get

Liquidation is a forced close executed into whatever liquidity exists. Fees and slippage apply, and on many venues an additional liquidation penalty. The realised loss is therefore normally worse than the arithmetic of entry price minus liquidation price suggests.

Where you will run into it

Displayed on the order ticket before you confirm and on every row of the positions panel afterwards. It is the single number worth checking against the range the market has actually traded in recently, rather than against the number you hope it will not reach.