Many beginners, after opening their first position on the Binance official site, often ask: "At what price drop will I be liquidated?" While the position page on the official Binance App displays an "Est. Liq. Price," few truly understand the logic behind it. To put it simply: liquidation isn't triggered when you lose 100% of your margin; it happens when your Margin Ratio < Maintenance Margin Rate, which varies based on leverage and position tiers. At 10x leverage, a price move of approximately -9.6% will trigger liquidation, -19.6% at 5x, and just -0.4% at 125x. If you haven't installed the client yet, check the iOS Installation Guide.
I. The Core Concept: Margin Ratio
The sole criterion for liquidation is when the Margin Ratio falls below the Maintenance Margin Rate.
Formula:
Margin Ratio = Maintenance Margin / (Account Balance + Unrealized PnL) × 100%
Or, understood inversely:
Margin Ratio = Maintenance Margin Rate / (1 + Unrealized PnL %)
When the Margin Ratio reaches 100%, liquidation is triggered. Essentially, when your available funds drop below the minimum margin required to keep the position open, the system takes over to close it.
The "Maintenance Margin Rate" is the minimum margin percentage required for different position sizes as published by Binance. The larger the position, the higher the maintenance margin rate.
II. Tiered Maintenance Margin Rates (Example: BTCUSDT Perpetual)
| Position Tier (USDT) | Max Leverage | Maintenance Margin Rate |
|---|---|---|
| 0 - 50,000 | 125x | 0.4% |
| 50,000 - 250,000 | 100x | 0.5% |
| 250,000 - 1,000,000 | 50x | 1% |
| 1,000,000 - 5,000,000 | 20x | 2.5% |
| 5,000,000 - 20,000,000 | 10x | 5% |
| 20,000,000 - 50,000,000 | 5x | 10% |
| 50,000,000+ | 4x | 12.5% |
Note: Different assets (ETH, SOL, BNB, etc.) have their own tier tables, and altcoins generally have significantly higher maintenance margin rates. You can check the specific tables on the Binance "Futures Rules" page.
III. Liquidation Price Formulas
Simplified formula (excluding fees and funding rates):
Long Position Liq. Price = Entry Price × (1 - 1/Leverage + Maintenance Margin Rate)
Short Position Liq. Price = Entry Price × (1 + 1/Leverage - Maintenance Margin Rate)
Example: BTCUSDT Perpetual, Long, Entry at 60,000, 10x Leverage, Position Tier < 50,000 USDT (Maintenance Margin Rate 0.4%):
- Liq. Price = 60,000 × (1 - 0.1 + 0.004) = 60,000 × 0.904 = 54,240
- Liq. Distance = (60,000 - 54,240) / 60,000 ≈ 9.6%
This means if the price drops by 9.6% to 54,240, you will be liquidated.
For a short position, Liq. Price = 60,000 × (1 + 0.1 - 0.004) = 60,000 × 1.096 = 65,760; you are liquidated if the price rises to 65,760.
IV. Liquidation Distance Quick Reference (by Leverage)
The following table applies to BTCUSDT Perpetual Isolated Long positions (simplified with a 0.4% Maintenance Margin Rate):
| Leverage | Liq. Distance (Long) | Liq. Distance (Short) |
|---|---|---|
| 1x | -99.6% | +99.6% |
| 2x | -49.6% | +49.6% |
| 3x | -33.0% | +33.0% |
| 5x | -19.6% | +19.6% |
| 10x | -9.6% | +9.6% |
| 20x | -4.6% | +4.6% |
| 50x | -1.6% | +1.6% |
| 75x | -0.93% | +0.93% |
| 100x | -0.6% | +0.6% |
| 125x | -0.4% | +0.4% |
Keeping this table near your screen helps you instantly see how much volatility your current leverage can withstand.
V. Cross vs. Isolated Margin: Liquidation Price Differences
In Isolated Margin, the liquidation price follows the formula above because the margin is fixed for a single position.
In Cross Margin, the calculation includes the entire account balance in the denominator:
Cross Margin Liq. Price ≈ Entry Price × (1 - Total Account Balance / Notional Value + Maintenance Margin Rate)
Example: Account with 10,000 USDT, Long 0.1 BTC (Notional value 6,000 USDT) at 10x Leverage.
- Isolated: Margin is 600 USDT, Liq. Price ≈ 54,240.
- Cross: The entire 10,000 USDT acts as margin, meaning capital utilization is 6,000 / 10,000 = 60%. The Liq. Price would be roughly 60,000 × (1 - 10,000/6,000 + 0.004) ≈ negative (theoretically impossible to liquidate unless the entire account is wiped out).
In practice, Cross Margin liquidation prices are calculated dynamically by the system. The smaller the individual position and the larger the account balance, the further away the liquidation price is (it can even theoretically drop to zero without liquidation).
VI. Loss Percentage vs. Margin Depletion
Liquidation distance refers to the "price change," while margin loss is a different matter. See this table:
| Leverage | Liq. Distance | Margin Loss Ratio |
|---|---|---|
| 5x | -19.6% | -98% |
| 10x | -9.6% | -96% |
| 20x | -4.6% | -92% |
| 50x | -1.6% | -80% |
| 100x | -0.6% | -60% |
| 125x | -0.4% | -50% |
Note a counter-intuitive point: The higher the leverage, the lower the "Margin Loss Ratio" that triggers liquidation. Because margin is so small at high leverage, the liquidation distance is extremely short, leaving very little "loss buffer" for the system. This means the residual value of the margin after liquidation might actually be higher, but it doesn't mean high leverage is safer—the probability of liquidation is significantly higher.
VII. Hidden Factors Affecting Liquidation Price
- Funding Fee Arrears: If you hold a position long-term and your margin isn't enough to cover funding fees, the liquidation price will creep closer.
- Trading Fees: Liquidation orders are executed as taker orders, and fees are deducted from the available margin, bringing the liquidation price slightly closer.
- Index Price vs. Mark Price: Binance uses the "Mark Price" to trigger liquidation, not the Last Price. Mark Price = Spot Index + Funding Basis, preventing mass liquidations caused by price manipulation on a single exchange.
- Tiered Maintenance Margin: As your position size increases, the Maintenance Margin Rate automatically rises, moving the liquidation price closer.
- Insurance Fund: If the final liquidation execution price is better than the liquidation price, the surplus goes to the Insurance Fund; if it is worse (deficit/negative equity), the Insurance Fund covers the loss.
VIII. Checklist to Reduce Liquidation Risk
- Keep leverage ≤ 10x. This gives you a liquidation distance of ≥ 9.6%.
- Set Stop-Loss orders. Let your stop-loss trigger before liquidation so you can exit the trade on your own terms.
- Avoid high-volatility periods. Volatility of 1%-3% is common during CPI releases, interest rate decisions, or ETF approvals.
- Use Isolated Margin + small positions. This limits your loss to that specific margin without affecting the rest of your account funds.
- Add Margin. In Isolated Margin, you can manually add margin to push the liquidation price further away. Caution: This increases your maximum possible loss for that single trade.
- Use Mark Price for Stop-Loss. Some advanced orders on Binance allow you to trigger based on "Mark Price" to avoid being stopped out by brief price spikes.
- Monitor Funding Rates. Long-term positions with high funding rates will be slowly eroded, gradually bringing the liquidation price closer.
IX. FAQ
Q: I have a 100 USDT account balance and open a 0.001 BTC Long at 10x leverage. What is the liquidation price? A: Notional value = 60 USDT, initial margin 6 USDT. The Isolated Liq. Price is approximately 60,000 × 0.904 = 54,240. The other 94 USDT in your account remains safe.
Q: I set a -3% stop-loss at 10x leverage. Will I be stopped out or liquidated first? A: At 10x leverage, the liquidation distance is about -9.6%. Your -3% stop-loss is well before liquidation, so under normal circumstances, your stop-loss will trigger first—unless the market gaps directly past both prices.
Q: Does Mark Price or Last Price trigger liquidation? A: Binance uses Mark Price to trigger liquidation to avoid unfair liquidations during price spikes. However, the Mark Price might trigger even if you haven't seen the "Last Price" hit that level yet.
Q: Does liquidation execute immediately? A: Once the system takes over, it places a market order. In normal conditions, it executes within milliseconds, though slippage can occur in low-liquidity markets.
Q: Does the liquidation price change over time? A: Yes. Funding rates, adding margin, or changing position sizes will all cause the liquidation price to shift. It is good practice to check your estimated liquidation price every few hours.
Q: Can the liquidation price be below zero? A: Theoretically, with Cross Margin and a very high account balance, the liquidation price can be very far away, but it will never be below zero.
Q: Can I get my money back after being liquidated? A: No. Liquidation is a market mechanism where the loss has already been realized and executed. However, you can learn from the experience—analyzing your leverage, position size, and stop-loss strategy—to avoid it next time.
Futures are high-risk derivatives. Liquidation distance is the most direct indicator of your risk exposure. It is recommended to check the "Est. Liq. Price" before placing every order. For detailed risk disclosures, see the Disclaimer.