Liquidation is triggered when the Mark Price hits the Liquidation Price due to a significant position Margin loss. Here are the examples of Liquidation Price calculations on BTCMEX.
Liquidation: An automatic closing of the position due to a significant Margin loss.
BTCMEX Liquidation Engine takes over an open position when the Mark Price of a contract falls below the Liquidation Price for Longs, or Rises above your Liquidation price for Shorts.
You can check the distance to your Liquidation Price at the bottom of the BTCMEX Trading page.
Liquidation Price: Calculations
Liquidation Price for Isolated Margin Long position:
LP = Avg Entry Price x Leverage / (Leverage + 1 - (Maintenance Margin Rate x Leverage))
Liquidation Price for Isolated Margin Short position:
LP = Avg Entry Price x Leverage / (Leverage - 1 + (Maintenance Margin Rate x Leverage))
Liquidation: Examples
If a trader has a Long position of 50 BTC/USD contracts with 50x Leverage at an Entry Price USD 8,125, the estimated Liquidation Price would be USD 8,006.
If a trader has a Short position of 50 BTC/USD contracts with 50x Leverage, and the Entry Price of the position is USD 8,125, the estimated Liquidation Price is USD 8,248.5.
Learn more about Long and Short positions here.
Avoiding Liquidation
There's a Cross-Margin function available on BTCMEX. Cross-Margin allows you to open a position using the entire Available Margin to push the Liquidation Price by adding Margin automatically.
Liquidation can be avoided by Adding/Removing Margin manually. You can add or remove Margin in the open position settings, but it won’t change the position value. Adding Margin will reduce the Leverage and push away the Liquidation Price. Removing Margin will increase the Leverage and move the Liquidation Price closer to the Mark Price - the trigger for Liquidation.
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