How to Calculate Liquidation Price For Inverse 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 requirement, 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 * Contract Value / Settlement Price

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

Maintenance Margin Rate please refer to Introduction to Inverse Contract Leverage and Margin.

 

Data Update

The liquidation price does not change before and after the settlement, and it'll be recalculated at the time of margin call or Marke Price update.