How to calculate your liquidation price before you open a crypto futures trade (with 3 quick examples)

Opening a futures trade without knowing your liquidation price is like driving downhill with no brake check. You might be fine for a while, then one fast move, one wick, and your position is forced closed when you least expect it. This guide is educational only, not financial advice. Futures and perpetuals are high risk, and liquidation rules vary by exchange, by maintenance margin tiers, and also by fees and funding. So the math here is a practical “do it on paper” estimate, then you should confirm it with your platform’s calculator and contract specs. What liquidation price really means (and what it doesn’t) Liquidation price is the approximate price level where your position equity can no longer support the maintenance margin, so the system takes over and closes (liquidates) the position. A few important clarifications, because people mix them up: Liquidation is usually triggered by mark price, not the last traded price. That means your chart candle is not the only truth. Many platforms explain this clearly in their liquidation docs (for example, this overview of Liquidation Price (USDT Contract) highlights mark price as the trigger). Your liquidation price is not your stop-loss. A stop-loss is your choice (risk plan). Liquidation is the exchange protecting the system. The exact liquidation number can shift. Fees, funding payments, tiered maintenance margin, and auto-deleveraging rules can all move the real level a bit. So we calculate an estimate, then we keep a buffer (because markets don’t ask permission). The simple liquidation price model you can calculate by hand Infographic showing long and short liquidation zones and the key inputs, created with AI. The inputs you need (keep it boring and exact) You only need five items to get a clean estimate: Entry price: your average fill price.Position size (Qty): for example 0.1 BTC, 2 ETH.Leverage (L): 5x, 10x, etc.Maintenance margin rate (MMR): often shown in a tier table (example 0.5% = 0.005).Margin mode: isolated or cross, because it changes what “available margin” means. Step 1: calculate notional, initial margin, maintenance margin Notional (position value) = Qty × Entry Initial Margin (IM) = Notional ÷ L Maintenance Margin (MM) = Notional × MMR Liquidation is roughly when your loss eats the buffer: Loss at liquidation ≈ IM − MM(we ignore fees and funding here on purpose, to keep it replicable in a spreadsheet) Step 2: the quick formulas (isolated, linear USDT-style contracts) For a long (you lose when price goes down): P_liq ≈ Entry − (IM − MM) ÷ Qty same thing written compact: P_liq ≈ Entry × (1 − 1/L + MMR) For a short (you lose when price goes up): P_liq ≈ Entry + (IM − MM) ÷ Qty compact: P_liq ≈ Entry × (1 + 1/L − MMR) If you want to confirm your platform’s exact number (including fees and tiers), use its calculator. A common reference tool is a futures liquidation price calculator, but keep in mind each exchange has its own model details. Why your final number won’t match exactly Even if your math is perfect, the platform might differ because: Maintenance margin is tiered (bigger positions, higher MMR). Liquidation fee and close fee can be included in the liquidation threshold. Funding payments can slowly reduce your margin if you keep a position open. Mark price math can include index components and dampeners. Contract type matters (USDT-margined linear vs coin-margined inverse). If you want a deeper view of an exchange-style formula write-up, see an example explanation like Liquidation Price Calculation under Isolated Mode (use it as context, not as a universal rulebook). 3 quick liquidation price examples (easy, round numbers) Three side-by-side liquidation calculations (long, short, cross margin), created with AI. To keep this simple, we assume: no fees, no funding, and a flat MMR (no tiers). That’s not “real life exact”, but it’s a strong pre-trade estimate. Example 1: BTC long, $50,000 entry, 10x, isolated Assume: Entry = $50,000 Qty = 0.10 BTC Leverage = 10x MMR = 0.5% (0.005) Step-by-step: Notional = 0.10 × 50,000 = $5,000 IM = 5,000 ÷ 10 = $500 MM = 5,000 × 0.005 = $25 IM − MM = 500 − 25 = $475 Price drop allowed = (IM − MM) ÷ Qty = 475 ÷ 0.10 = $4,750 Liquidation price ≈ 50,000 − 4,750 = $45,250 Example 2: ETH short, $3,000 entry, 5x, isolated Assume: Entry = $3,000 Qty = 2 ETH Leverage = 5x MMR = 0.5% (0.005) Step-by-step: Notional = 2 × 3,000 = $6,000 IM = 6,000 ÷ 5 = $1,200 MM = 6,000 × 0.005 = $30 IM − MM = 1,200 − 30 = $1,170 Price rise allowed = 1,170 ÷ 2 = $585 Liquidation price ≈ 3,000 + 585 = $3,585 Example 3: Cross margin long (your wallet balance shifts the liquidation) Cross margin is where many people get confused, because the position can “borrow strength” from your available balance (and sometimes from other positions too, which becomes messy fast). Assume: Entry = $30,000 (BTC long) Qty = 0.20 BTC Leverage = 5x MMR = 0.5% (0.005) Extra available balance to support position (cross buffer) = $500 No other open positions, no other PnL Step-by-step: Notional = 0.20 × 30,000 = $6,000 IM = 6,000 ÷ 5 = $1,200 MM = 6,000 × 0.005 = $30 Available margin (simplified) = IM + buffer = 1,200 + 500 = $1,700 Buffer to lose before liquidation ≈ Available margin − MM = 1,700 − 30 = $1,670 Price drop allowed = 1,670 ÷ 0.20 = $8,350 Liquidation price ≈ 30,000 − 8,350 = $21,650 Quick scan summary: Scenario Entry Leverage Qty MMR Estimated liquidation price BTC Long (isolated) $50,000 10x 0.10 BTC 0.5% $45,250 ETH Short (isolated) $3,000 5x 2 ETH 0.5% $3,585 BTC Long (cross, +$500 buffer) $30,000 5x 0.20 BTC 0.5% $21,650 Pre-trade checklist (do this before you click “Open”) This is the small routine that saves accounts, even if it feels slow: Confirm margin mode: isolated or cross, and why you chose it.Find the maintenance margin rate: check tiers for your notional size.Compute estimated liquidation price: using the hand math above.Compare liquidation vs stop-loss: your stop should usually be far before liquidation.Leave a buffer: don’t plan to live one wick away from liquidation.Re-check with the platform’s calculator: especially if you scale in or use multiple entries. Risk management: stop-loss beats liquidation (almost every time) Liquidation is not a “normal exit”, it’s a forced exit with bad control. If your trade plan is “I’ll just get liquidated if wrong”, you’re paying for risk with maximum chaos. A few grounded habits: Position sizing first: lower leverage often fixes more problems than a smarter indicator. Stop-loss placement: set it where the idea is invalid, not where your fear starts. Keep extra margin buffer: even in isolated mode, you can often add margin later, but don’t rely on doing it during panic. Watch volatility events: news and low-liquidity hours create mark price jumps, and liquidation doesn’t care about your “it will bounce” story. Common mistakes that move liquidation price against you Forgetting fees and funding, which slowly reduces usable margin. Ignoring tiered MMR, then being surprised when a bigger size has a tighter liquidation. Mixing cross with multiple positions, so one bad trade drags others (a quiet chain reaction). Using last price instead of mark price, then thinking liquidation was “unfair”. Conclusion Knowing your liquidation price before you open a crypto futures trade is basic self-defense, not advanced math. Calculate it once with a simple model, confirm it with your exchange’s calculator, then place your stop-loss with real breathing room. If you’re one quick wick away from liquidation, you’re not trading, you’re waiting for a coin flip. Keep the buffer, keep the position size sane, and make liquidation the thing that almost never happens.