# Liquidation

> Liquidation is the forced closure of a leveraged position by the venue when its margin falls below the maintenance requirement. It is not a request like a stop-loss — it executes regardless of intent, usually at a worse price, and typically with an additional fee. At 10× leverage with a 0.5% maintenance rate, roughly a 9.5% adverse move is enough to trigger it.

Canonical HTML page: https://qanterion.com/glossary/liquidation
Updated: 2026-08-18
Also known as: forced liquidation, margin call closure

## How it is calculated

```
Long  liquidation ≈ Entry × (1 − 1/Leverage + Maintenance margin rate)
Short liquidation ≈ Entry × (1 + 1/Leverage − Maintenance margin rate)

Survivable move ≈ (1/Leverage − Maintenance margin rate) × 100 %
```

## Worked example

Long at $65,000 with 10× leverage and 0.5% maintenance → liquidation near $58,825.

## Liquidation outranks your stop

A stop-loss is an instruction the venue may or may not reach; liquidation is an action the venue takes on its own behalf. If the stop sits further from entry than the liquidation price, the stop can never fill — the position is closed first. Sizing must therefore place the stop well inside the liquidation distance, with room for gap risk in fast markets.

## Isolated versus cross margin

Under isolated margin, a position is backed only by its own collateral, so liquidation is contained to that position. Under cross margin the whole account balance backs every position: individual liquidation prices move further away, and a single bad position becomes able to take the account with it. Cross margin pools risk rather than reducing it.

## How it gets misread

Adding margin to a losing position is widely treated as risk management because it pushes liquidation further away. It does not reduce risk — it increases the capital exposed to an idea already being contradicted, which is how a manageable loss becomes an account-level one.

## Calculate it

- Liquidation Price Calculator: https://qanterion.com/tools/liquidation-price-calculator
- Position Size Calculator: https://qanterion.com/tools/position-size-calculator

## See also

- Position sizing: https://qanterion.com/glossary/position-sizing
- Funding rate: https://qanterion.com/glossary/funding-rate
- Maximum drawdown: https://qanterion.com/glossary/max-drawdown

## Sources

- [Liquidations](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/liquidations) — Hyperliquid (official protocol documentation)
- [Margining](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/margining) — Hyperliquid (official protocol documentation)
- [ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors](https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors) — European Securities and Markets Authority

## Other languages

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- Bahasa Indonesia: https://qanterion.com/id/glossary/liquidation
- العربية: https://qanterion.com/ar/glossary/liquidation

## Risk notice

Definitions are educational. Nothing here is investment advice, and no metric described on this page predicts future results.