Explore more calculators
Liquidation price is the level at which your leveraged position is automatically closed by the exchange to prevent further losses. It occurs when your margin is no longer sufficient to support your open position.
In simple terms, it is the price where you lose most or all of your collateral. Understanding your liquidation price is critical when trading with leverage because even small price movements can trigger liquidation.
When you open a leveraged position, you are effectively borrowing funds to increase your exposure. This amplifies both potential profits and losses.
If the market moves against your position and your losses approach your margin, the exchange will automatically close your trade to prevent negative balance.
Many traders focus on profit targets but ignore liquidation levels. This is a critical mistake.
Professional traders always know their liquidation price before entering a trade.
Even small changes in these variables can significantly shift your liquidation level.
Leverage creates the illusion of opportunity, but it dramatically increases risk. A 1–2% move in the market can liquidate a highly leveraged position.
For example:
This is why most inexperienced traders lose money when using high leverage.
This tool helps you estimate your liquidation price based on your trade parameters. Before entering any leveraged position, you should:
If your stop-loss is too close to your liquidation price, your position is extremely risky.
Liquidation is not just a technical level — it is a risk management boundary.
Successful traders do not ask:
“How much can I make?”
They ask:
“How close am I to liquidation?”
Controlling this distance is one of the most important skills in leveraged trading.
Because leverage amplifies small price movements. A minor move against your position can rapidly reduce your margin, triggering liquidation faster than most traders expect.
Many traders focus on potential profit and ignore downside risk. They assume the market will reverse before reaching liquidation, which often leads to overleveraged positions.
Higher leverage brings your liquidation price closer to your entry. This means you have less room for price fluctuations, increasing the probability of being liquidated.
Liquidation is a forced exit where you lose control of the trade. Unlike a controlled loss with a stop-loss, liquidation often results in maximum loss of your margin.
Yes. Even profitable strategies can fail if position sizing and risk management are poor. A single losing streak with high leverage can wipe out your account.
Professionals think in terms of survival first. They use lower leverage, plan exits in advance, and avoid situations where liquidation is even possible.
Disclaimer: This is a simplified estimation. Real liquidation prices vary by exchange and fees.