The liquidation price calculation perpetual traders need most is simple enough to do by hand: it takes the entry price, the leverage and the maintenance margin rate. Exchanges usually show the result in the order ticket, but knowing where it comes from tells you how far a position can move against you, and why higher leverage pulls that point closer.
This guide gives simplified formulas for isolated longs and shorts, works through examples, lists what the formulas leave out, and explains why, on a prop account, the firm’s loss floor arrives first.
What triggers a liquidation
In isolated mode a position posts initial margin, about its notional value divided by leverage. The exchange also requires maintenance margin, a smaller percentage of the position. When unrealised losses eat the posted margin down to the maintenance level, the exchange closes the position. The liquidation price is the price at which that happens.
So the distance to liquidation is roughly the share of the position you posted as margin, minus the share the exchange insists you keep. At 20× you post 5% of notional; with a 0.5% maintenance rate, a move of about 4.5% against you ends the trade.
The liquidation price calculation perpetual traders can check by hand
Long, isolated: liquidation price ≈ entry × (1 − 1 ÷ leverage + maintenance rate).
Short, isolated: liquidation price ≈ entry × (1 + 1 ÷ leverage − maintenance rate).
Both versions measure maintenance on the entry notional and ignore fees and funding. Exchanges publish their exact formulas, which use the mark price and a maintenance amount for each position tier. The result is usually close to this estimate, but not identical.
Worked example: an isolated long
A long of 0.1 BTC at an illustrative $100,000 is a $10,000 position. At 20× it posts $500 of margin, and a 0.5% maintenance rate keeps $50 behind it. Liquidation comes when the loss reaches $450.
With the formula: $100,000 × (1 − 0.05 + 0.005) = $95,500, a fall of 4.5%. A 0.1 BTC position loses $0.10 for every dollar bitcoin falls, so a $450 loss is a $4,500 fall: the same answer.
Worked example: an isolated short
A short of the same size at 10× posts $1,000. It can lose $950 before maintenance is reached, so the price must rise to $100,000 × (1 + 0.1 − 0.005) = $109,500, 9.5% above entry.
The table shows the pattern: halving the leverage roughly doubles the distance to liquidation, for longs and shorts alike.
| Leverage | Long liquidation | Short liquidation | Adverse move |
|---|---|---|---|
| 5× | $80,500 | $119,500 | 19.5% |
| 10× | $90,500 | $109,500 | 9.5% |
| 20× | $95,500 | $104,500 | 4.5% |
| 50× | $98,500 | $101,500 | 1.5% |
What the simplified formula leaves out
- Mark price: exchanges typically liquidate on a mark price anchored to a spot price index, not on the last trade, so a brief wick on one venue may not trigger it.
- Tiered maintenance: larger positions and smaller coins usually carry higher maintenance rates, which pull the liquidation price closer.
- Fees: some exchanges reserve a closing or liquidation fee, so liquidation can arrive a little earlier than the formula says.
- Funding: on some venues, payments in isolated mode come out of or go into the position’s margin and move the liquidation price over time.
- Added margin and cross mode: topping up an isolated position pushes the price away, and a cross-margin liquidation price depends on the whole balance and every other position.
Why the prop floor arrives first
A prop account does not wait for margin to run out. On a QATS $10K Crypto evaluation the daily loss limit is $400 (4%) and the maximum loss $600 (6%), both counted on the whole account with open positions included. On the current Crypto plans, touching the daily limit breaches the evaluation.
Compare that with an exchange. If the whole $10,000 backed a position at 20×, the position would be $200,000 notional and an isolated liquidation would sit about 4.5% away. The daily limit would be gone after a 0.2% move.
| Leverage | Position notional | Exchange isolated liquidation | QATS daily limit reached |
|---|---|---|---|
| 5× | $50,000 | 19.5% move | 0.8% move |
| 10× | $100,000 | 9.5% move | 0.4% move |
| 20× | $200,000 | 4.5% move | 0.2% move |
Plan around the floor, not the liquidation price
On a prop account the exchange liquidation price is a curiosity. The numbers to plan around are the dollar distance to your daily limit and to the maximum-loss floor, which Risk center shows for the account.
- Note today’s remaining daily loss and the current floor before the first trade.
- Place the stop where the setup is wrong, then size the position so the stop costs a small share of the daily limit.
- Leave room for slippage: a stop becomes a market order when it triggers.
- Count open positions together, because the limits apply to the account, not to each trade.
- On QATS Crypto accounts P&L is valued at the last traded price from the market data feed, so a sharp wick counts.
Frequently asked questions
01How do you calculate the liquidation price of a perpetual long?
A simplified estimate for an isolated long is entry × (1 − 1 ÷ leverage + maintenance rate). Exchanges refine it with the mark price, tiered maintenance and fees.
02Why is my exchange liquidation price different from the formula?
Exchanges use their own maintenance tiers, the mark price and fees reserved for closing, and in cross mode the whole balance and other positions. The simplified formula ignores all of these.
03Can a prop account be liquidated?
The firm’s loss limits normally end the trade first. On QATS, reaching the maximum-loss floor, or the daily limit on the current Crypto plans, breaches and closes the account long before margin would run out.
04Does lower leverage move the liquidation price?
Yes. On an isolated position, halving leverage roughly doubles the distance to liquidation. On a prop account it does not change the loss limits, which are fixed in dollars.
Educational content, not investment advice. QATS evaluations and initial funded accounts are simulated; payouts depend on eligibility, verification and the applicable agreement.