How liquidation price is calculated in crypto futures

Your liquidation price is the mark price at which the margin left in a futures position falls to the maintenance margin the exchange requires. You find it by solving one equation: wallet balance plus unrealized PnL equals maintenance margin, then reading off the price where that happens.

Margin mode, leverage, size and tier only change the inputs. We use the Binance USDⓈ-M one-way formula below because Binance publishes it in full, and the arithmetic fits on the back of an envelope.

The liquidation price formula

For a single position in one-way mode, Binance gives this:

LP = (WB + cum − s·Q·E) / (Q·MMR − s·Q)

Here is what each letter means.

• WB is the wallet balance that backs the position. In isolated margin it is the margin you put in. In cross margin it is your whole futures balance, minus the opening fee.
• cum is the maintenance amount for your tier, a fixed dollar figure the exchange lists next to each bracket.
• s is the side: plus one for a long, minus one for a short.
• Q is the position size in coins.
• E is your entry price.
• MMR is the maintenance margin rate for your tier.

Read it as a balance sheet. The top line is the money you have against the money the position cost. The bottom line is how fast that money shrinks per dollar of price move, after the exchange keeps its maintenance cut. Divide one by the other and you get the price where the account runs dry.

Leverage never shows up as its own term. It hides inside WB. At higher leverage you post less margin for the same size, so WB is smaller and the liquidation price moves closer to entry.

A worked example, isolated and cross

The numbers below are made up and round so the arithmetic stays readable. Real tiers differ per pair and change over time.

Example: say you open a 1 BTC long at an entry of $50,000, with 10x leverage in isolated margin. Your margin is 50,000 / 10 = $5,000, so WB = 5,000. Assume the first tier has MMR = 0.5% and cum = 0. LP = (5,000 + 0 − 1 × 1 × 50,000) / (1 × 0.005 − 1 × 1) = −45,000 / −0.995 ≈ $45,226. Same trade as a short (s = −1): LP = (5,000 + 50,000) / (0.005 + 1) = 55,000 / 1.005 ≈ $54,726. Now switch the long to cross margin with a $20,000 futures balance and a $20 opening fee. WB = 19,980. LP = (19,980 − 50,000) / −0.995 = −30,020 / −0.995 ≈ $30,171. Last check on the isolated long: a stop 5% under entry sits at $47,500, about $2,274 above the $45,226 liquidation. The stop fires first.

Look at the isolated long first. Simple leverage math says the margin is gone after a drop equal to one tenth of the entry. The exchange closes you a couple of hundred dollars earlier than that, because the maintenance margin keeps the last slice for itself. The short mirrors it above entry.

The cross version is a different animal. It survives a drop several times deeper, since the whole balance stands behind one trade. That sounds comfortable until you notice what is now on the line.

Isolated vs cross margin liquidation

Isolated margin caps what you can lose on one position at the margin you assigned to it. The liquidation price is fixed the moment you open, unless you add margin by hand. We think this is the better default for most traders who size positions with a stop, because the worst case is known in advance.

Cross margin pulls from your full futures balance. The liquidation price is further away, which feels safer. The cost is that a bad trade can drain money you never meant to risk on it. It also means your liquidation price moves when anything else in the account moves: another position's PnL, a transfer out, a funding payment.

A quick way to decide:

1. You trade one position at a time with a hard stop: isolated keeps the math simple.
2. You run hedged or offsetting positions and want them to share collateral: cross does that.
3. You are not sure what your balance is backing right now: use isolated until you are.

Cross margin with several open positions needs the full account formula, which sums every position's maintenance margin and PnL. The single-position version above is only exact when one position is open.

Mark price vs last price in liquidation

Exchanges liquidate on mark price. Mark price blends the index (spot prices from several venues) with a funding-based adjustment, so one big market order on a thin book cannot knock out every stop and position at once.

This matters in two ways. First, a wick on the last-price chart that pokes through your liquidation level does not always liquidate you, because mark price may not have gone that far. Second, the reverse can happen too: if the index moves while the perpetual lags, mark price can reach your level before the chart you watch shows it.

When you check how close you are, compare the liquidation price with mark price. On Binance and Bybit both are on the order screen.

Maintenance margin tiers explained

Maintenance margin is not a flat rate. Exchanges sort positions into brackets by notional value (Q × E). Small positions get the lowest MMR. As notional grows, each bracket raises the MMR and lowers the maximum leverage you can pick.

The cum term keeps the math continuous. Without it, crossing into a new bracket would make your required margin jump. cum subtracts the difference so the maintenance amount rises smoothly with size.

So a bigger position at the same leverage sits closer to liquidation, simply because its MMR is higher. Adding to a winner can tip you into the next bracket without any warning on the order screen. Tiers are also set per pair, and an altcoin perpetual usually has steeper brackets than BTC or ETH.

Pull the current bracket table for your pair before you trust any number, ours included.

How Bybit's formula differs

Bybit publishes an isolated formula that looks different but does the same job. For a long it is (E·Q − E·Q/L − MMD) / (Q − Q·MMR), and for a short (E·Q + E·Q/L + MMD) / (Q + Q·MMR), where L is leverage and MMD is the maintenance margin deduction for the tier. MMD plays the same role as Binance's cum.

Run the same trade through both and the answers land a few dollars apart. Closing fees and rounding explain most of the gap. Bybit publishes no cross formula for a single position, so treat any Bybit cross number from a third-party calculator as an estimate.

Why your liquidation price moves after you open

People expect the number to stay put. It drifts.

Funding is the quiet one. Payments come out of margin, so an isolated long that pays funding at every window has its liquidation price dragged up toward entry, a little at a time. In cross, any change to the balance moves it: a losing trade closing elsewhere, a withdrawal, a new position. On an isolated position, adding margin pushes the level away, while adding size pulls it closer and can bump you into a new tier. Changing leverage on an open isolated position re-prices WB.

Holding for days? Check the liquidation price again after each funding window.

Put your stop before your liquidation price

The liquidation price is where the exchange closes you. Your stop is where you choose to close. If the stop sits beyond the liquidation price, the stop never fires: the exchange gets there first, and liquidation often adds a fee on top of the loss.

Work backwards instead. Pick the stop from the chart, decide how much of your account you will lose if it hits, and size the position from that. Then compute the liquidation price and confirm it sits clearly beyond the stop, with room for a wick and for mark price drifting from last price. If it does not, lower the leverage or cut the size. This breaks down in fast markets where price gaps past the stop; a stop-market order limits that, it does not remove it.

Open a live chart, draw your entry, stop and liquidation levels as horizontal lines, and look at how far recent candles on the 1h and 4h have travelled. If an ordinary candle could cover the gap between your stop and your liquidation, the buffer is too thin.

Not financial advice.

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How do you calculate liquidation price for a long position?

Use LP = (WB + cum − Q·E) / (Q·MMR − Q) on Binance one-way mode, where WB is your margin, Q the size, E the entry and MMR and cum come from your tier. The result is the mark price at which your remaining margin equals the maintenance margin.

Why is my liquidation price closer than my leverage suggests?

Maintenance margin takes a slice before your margin hits zero, so liquidation comes a little earlier than the simple leverage math suggests. Fees and funding shift it further.

Is cross margin safer than isolated margin?

Cross puts the liquidation price further away, but it risks your whole futures balance on the position. Isolated caps the loss at the margin you assigned, which makes the worst case easier to plan.

Does liquidation use mark price or last price?

Binance and Bybit both liquidate on mark price. A wick on the last-price chart does not always trigger it, and mark price can also reach your level before the chart does.

What is maintenance margin in crypto futures?

It is the minimum margin an exchange requires to keep a position open, set as a rate that rises with position size in tiers. When your margin falls to it, the position is liquidated.