How Your Liquidation Price is Calculated
June 2026 · 6 min read
Liquidation isn't arbitrary — there's a formula. Knowing it lets you calculate your exact risk before entering a position, rather than discovering it during a market move. This article covers the formula used by Binance, Bybit, and OKX for isolated margin positions.
What Triggers Liquidation
An exchange liquidates a position when your remaining equity in that position drops to the maintenance margin level. The maintenance margin rate (MMR) is the minimum equity the exchange requires to keep a position open. When your loss reduces equity to exactly the MMR amount, the exchange closes your position — this is the liquidation price.
For major pairs like BTC and ETH on Binance, Bybit, and OKX, the MMR is typically 0.5%for smaller position sizes. This rate can increase for larger notional values (tiered maintenance margin). Always verify the current rate in your exchange's risk limit table.
The Formula
Long Position (Liquidation Price)
Liq Price = Entry × (1 − 1/Leverage + MMR)
As leverage increases, the second term (1/Leverage) shrinks — moving the liquidation price closer to entry.
Short Position (Liquidation Price)
Liq Price = Entry × (1 + 1/Leverage − MMR)
For shorts, the liquidation price is above the entry price. Higher leverage moves it closer to entry.
These formulas apply to isolated margin mode. In cross margin, the liquidation price shifts dynamically with your account balance and cannot be pre-calculated with a fixed formula.
Examples at Different Leverage Levels
Entry price: $40,000 · MMR: 0.5%
| Leverage | Long Liq Price | Short Liq Price | Distance from Entry |
|---|---|---|---|
| 5× | $32,200 | $47,800 | ±19.5% / ±19.5% |
| 10× | $36,200 | $43,800 | ±9.5% / ±9.5% |
| 20× | $38,200 | $41,800 | ±4.5% / ±4.5% |
| 50× | $39,400 | $40,600 | ±1.5% / ±1.5% |
At 50× leverage, a move of less than 2% triggers liquidation. At 5× leverage, you have ~19.5% buffer.
Step-by-Step Example (10× Long)
Entry Price: $40,000
Leverage: 10×
MMR: 0.5% = 0.005
Liq Price = 40,000 × (1 − 1/10 + 0.005)
= 40,000 × (1 − 0.100 + 0.005)
= 40,000 × 0.905
= $36,200
A drop from $40,000 to $36,200 — about 9.5% — would trigger liquidation at 10× leverage.
What the Formula Doesn't Include
The formula above is a simplified approximation. Real liquidation prices can differ slightly because of:
Summary
Liquidation is triggered when your position equity drops to the maintenance margin level. For isolated margin longs: Entry × (1 − 1/Lev + MMR). For shorts: Entry × (1 + 1/Lev − MMR). Higher leverage brings the liquidation price closer to your entry — at 50× leverage, a 2% move against you is enough. Always verify the exact MMR in your exchange's documentation, and use mark price (not last price) as the reference.