Your position and remaining balance are taken over by the risk system if your current balance drops below the maintenance margin requirement for an existing position. The liquidation price is the price at which the maintenance margin is no longer sufficient to cover your position and then whatever margin you have left is lost.
Note: The liquidation price is an estimate of when your account might get liquidated based on current market conditions and balances.
Any change to margin requirements, withdrawals, deposits, trades, transfers to other sub-accounts, and interest payments will affect the liquidation price. For example, accrual of interest payments at a rate of 0.01% over a 24-hour period will affect your balance, and hence, change the liquidation price.
Where Can I See the Liquidation Price?
The liquidation price of your position is displayed in the positions panel. The liquidation price shown in the UI is purely for educational purposes and it not used anywhere in the system. Positions are liquidated when the balance is not sufficient to cover the maintenance margin.
As soon as your available balance is due to drop below 0 due to changes in the mark price of a derivatives position, all open orders for derivatives positions in that settlement currency are cancelled.
For instance, if you are trading BTC-PERP and the price is very close to the liquidation price, all open orders for BTC-PERP will be cancelled since your BTC balance is due to drop below 0.
The available balance is calculated as:
available balance = market balance - (hold + initial margin + maintenance margin)
- available balance is the amount that can be used for withdrawals, balance transfers and opening new orders,
- market balance is your balance plus or minus your realised profit and loss (PnL),
- hold refers to the amount of funds needed to submit a limit order, and are released once an order gets filled or cancelled,
- initial margin is the amount of funds needed to enter a position, calculated as:
- initial margin= (minimal initial margin percentage + position margin multiplier * maximum absolute position) * absolute value of open orders that result in position increase
- maintenance margin is the amount of funds needed to keep a position open, calculated as:
- maintenance margin = (minimal maintenance margin percentage + position margin multiplier * maximum absolute position) * absolute position value
To prevent being liquidated, you can use a stop limit order to exit the trade before the market reaches the liquidation price. You can also use lower leverage to decrease the chances of depleting your maintenance margin, add more funds or reduce the size of your position.