How your liquidation price is derived: leverage, margin and the maintenance line
Most people believe they get liquidated when the loss equals their margin. That is not where it happens, and the gap between the two beliefs is where the surprise lives.
In one line: you are closed out when your margin falls to the maintenance requirement — a fraction of position value that must remain — not when it reaches zero. So liquidation always arrives before the loss you were braced for.
And it moves. Funding payments, fees and added position size all shift the line while the position is open. A number you computed at entry is a number about a position that no longer exists.
What the number is made of
Four inputs, and every one of them can change after you open:
- Entry price — where the position was opened, or the weighted average if you added to it.
- Position size — the notional value, which is your margin multiplied by leverage.
- Margin — what you have actually posted against it, plus or minus everything that has been added or deducted since.
- Maintenance margin requirement — the minimum proportion of position value that must remain. This is the one people do not know exists.
The relationship in words: as price moves against you, your margin is consumed. When what remains reaches the maintenance requirement, the position is closed. The requirement is greater than zero, which is exactly why liquidation happens before you have "lost it all" — the system closes you while there is still something left, because it needs to.
The maintenance margin, and why it is not a constant
The maintenance requirement is a percentage of position value, and on most venues it is tiered by position size: larger positions require a higher proportion. The reason is liquidity — a large position takes more market impact to close, so the system demands a larger cushion.
The consequence catches people out. Adding to a position can push it into a higher requirement tier, which moves the liquidation price against you on the existing part too. Someone adding margin to "make the position safer" while also increasing size can end up with a liquidation price closer than before. The two effects work in opposite directions and the tier change is invisible unless you go looking for it.
We do not publish the tier tables here, because they differ by contract and are revised. Your platform's contract specification page has them, and it is the only version that applies to your position.
Which price triggers it
Liquidation is normally evaluated against a mark price, not the last traded price on that venue.
The mark price is derived from broader market data — typically an index across several markets — rather than from whatever just printed on one order book. The reason is protective: without it, a brief spike on a single thin book could liquidate positions that the actual market never justified.
Two practical consequences. First, when you check your distance to liquidation, compare against the mark price; the last price can be meaningfully different in fast conditions. Second, you can be liquidated at a moment when the last traded price on your screen has not reached your liquidation level — the mark price got there, and the mark price is what counts.
Cross and isolated fail differently
| Isolated margin | Cross margin | |
|---|---|---|
| What backs the position | Only the margin assigned to it | The whole available balance |
| Maximum loss on one position | Bounded by that assigned margin | Bounded by the account |
| How it fails | Liquidates sooner, loses less | Liquidates later, loses more |
| Suits | Containing a single idea | Positions intended to offset each other |
The trade-off is a genuine one, not a beginner-versus-expert distinction. Isolated gives you a hard cap on one position's damage at the cost of being closed out earlier by ordinary volatility. Cross survives more noise, and the failure mode is that a single bad position can consume the whole account.
Our position: if you cannot state in one sentence why your positions offset each other, use isolated. Cross margin is a tool for a portfolio with an internal structure. Used on a set of unrelated directional bets, it is just a way of making one of them able to kill the rest.
Why the line moves while you hold
This is the section that matters most, and it is the one usually missing.
- Funding payments. On perpetuals, funding is deducted from margin every interval you hold. Less margin, closer liquidation price. It is small each time and relentless. See the funding rate.
- Fees. Opening cost comes out of the same pot.
- Adding to the position. Changes the average entry, the size, and possibly the requirement tier — all three inputs at once.
- Adding or removing margin. The obvious one, and the only one most people track.
- Contract specification changes. Requirements are set by the venue and can be revised, including during volatile periods.
So the entry-time liquidation price has a shelf life. The practical habit: read the current liquidation price off the position screen rather than remembering the one you calculated. The platform's number accounts for everything above; yours accounts for what you knew at the time.
The estimator on this site exists for planning — for asking "what happens if I use this leverage" before opening. It is deliberately not a live tracker, and it does not include fees, funding or tier crossings. It will therefore be optimistic relative to reality, and it says so on the page.
What leverage actually buys you
Leverage is usually described as amplifying gains and losses. That is true and it obscures the more useful framing: leverage is a choice about how much adverse movement you can survive.
Higher leverage means a smaller price move consumes your margin, so your liquidation price sits closer to entry. The relationship is roughly inverse — double the leverage, roughly halve the distance you can tolerate. At high multiples the tolerance can be smaller than a normal day's range for the asset, which means the position is not really a directional view at all. It is a bet that the next few hours are quiet.
Which is why the most common way to lose money here is not being wrong about direction. It is being right and getting closed out first, by ordinary volatility, before the move happened. The position was correct; the tolerance was not.
Leveraged derivatives can take 100% of your capital, and in extreme conditions more than you posted.
Under fast movement, insufficient liquidity or system stress, positions may be closed at prices materially worse than the calculated liquidation level. Understanding this mechanism does not reduce that risk. Nothing on this page recommends using these products.
Sources
- Binance Futures, leverage and margin tiers — maximum leverage, maintenance margin rate and maintenance amount by notional bracket, per contract. Every statement above about the maintenance rate stepping up as a position grows is a statement about this table.
- Binance help centre, Binance Futures liquidation protocols — the published account of mark price, the liquidation process, bankruptcy price and auto-deleveraging, and the basis for the point that liquidation does not trigger off the last traded price.
The bracket table differs by contract and the platform revises it. The arithmetic here shows a relationship; it only means something once your own contract's current values are in it. To try numbers, use the liquidation price calculator — it runs in your browser and uploads nothing.