What is liquidation price?
Definition
The liquidation price is the level at which an exchange forcibly closes a leveraged position because the remaining margin can no longer cover losses.
For a long position, a rough estimate of the liquidation price is entry × (1 − 1 ÷ leverage), before fees and maintenance margin. At 10x, that is about 10% below entry. At 50x, about 2%.
Exchanges calculate the exact level with their own maintenance margin and fee rules, so always check the figure the platform shows before you enter.
A disciplined trade places its stop loss well before the liquidation price. If your stop sits beyond liquidation, the exchange will close the trade before your plan does.
Related terms
General education only. Not financial advice.