How to Calculate Liquidation Price For Linear Contract

Futures trading, a percentage of position value needs to be reserved to keep your positions open, which is known as the Maintenance Margin. If you cannot fulfill your maintenance requirements, your position will be liquidated.


Liquidation Price

Liquidation Price refers to the trigger price at which forced liquidation starts. Fair Price Marking is adopted on CoinEx to avoid liquidations due to illiquid markets or manipulation, and the liquidation only occurs when the fair price is under the liquidation price for long positions or over it for short positions.

 

Calculation

1. Long Position

Liquidation Price = Settlement Price * (1 - Liquidation Margin Rate) / (1 - Maintenance Margin Rate)

Bankruptcy Price = Settlement Price * (1 - Liquidation Margin Rate)

2. Short Position

Liquidation Price = Settlement Price * (1 + Liquidation Margin Rate) / (1 + Maintenance Margin Rate)

Bankruptcy Price = Settlement Price * (1 + Liquidation Margin Rate)

3. Isolated Margin

Liquidation Margin Rate = (Position Margin - Unrealized PNL) / Settlement Value

4. Cross Margin

Liquidation Margin Rate = (Available Balance + Position Margin - Unrealized PNL) / Settlement Value

Settlement Value = Position Amount * Settlement Price

Please refer to What's Settlement Price for how to calculate settlement price when Pyramiding Auto-Settlement is enabled.

For Maintenance Margin Rate, please refer to Introduction to Linear Contract Leverage and Margin.

The liquidation price uses the same unit as the average opening price.

 

Data Update

When any of the following operations are performed, the forced liquidation price will be recalculated.

Cross Margin: Add position, close position, new order to add position (For it will reduce the available balance)

Isolated Margin: Add position, close position, margin call, reduce margin, adjust leverage