What Is a Liquidation in Crypto Futures and Why Did I Get Liquidated?

Liquidation is the most painful word in crypto trading because it often arrives faster than people expect. Understanding how the price is calculated is the first step to never seeing it.

What people on X are asking

The question usually comes right after it happens. In October 2025 one trader asked an exchange how their $150 position got liquidated when, by their reading, the chart never reached the liquidation price. In November 2026 another wrote that they were liquidated even though price did not hit the stop-loss or the liquidation level and asked what they had missed. Both questions point to the same mechanics: mark price, maintenance margin and the costs that quietly eat your buffer.

The fact-checked answer

Leverage and margin. In a futures or perpetual contract you post margin, a fraction of the position's value. At 10x leverage, $1,000 of margin controls a $10,000 position. The CFTC warns that leverage magnifies losses as well as gains and that you can lose your margin quickly.

Maintenance margin is the trigger. Exchanges require you to keep a minimum amount of margin (maintenance margin), often expressed as a percentage of position value that rises with position size. When your margin balance (initial margin plus unrealised profit or loss) drops below that minimum, the risk engine closes the position. Some exchanges charge an extra liquidation fee.

The rough formula. For an isolated-margin long position, the liquidation price is approximately: entry × (1 − 1/leverage + maintenance rate). For a short it is entry × (1 + 1/leverage − maintenance rate). Exact formulas vary by exchange and include fees.

Approximate liquidation distance by leverage (isolated margin, 0.5% maintenance rate)

Illustration computed by UXS from the formula above, before fees and funding. Real exchanges use tiered maintenance rates and their own mark-price rules. Tap a column header to sort.

Leverage	Margin per $10,000 position	Long entry $100: liquidation near	Move against you
2x	$5,000	$50.50	−49.5%
5x	$2,000	$80.50	−19.5%
10x	$1,000	$90.50	−9.5%
20x	$500	$95.50	−4.5%
50x	$200	$98.50	−1.5%
100x	$100	$99.50	−0.5%

Why the chart can lie. Most exchanges trigger liquidations on a mark price, usually built from a spot index across several venues, so that one odd trade does not wipe accounts out. Your chart may show the last traded price on one exchange, or a candle on a different timeframe. On top of that, trading fees and funding payments (the periodic payments between longs and shorts on perpetual contracts) are taken from your margin, which moves the liquidation price closer over time.

Cross margin changes the picture. In cross-margin mode the whole account balance backs every position. That can push the liquidation price further away, but a single bad trade can then consume the entire account.

UXS decision diagram

Am I close to liquidation?

Text version of the diagram

1. Is leverage above 5x? If yes: The buffer is under about 20%: consider reducing size
2. Is the position in cross margin? If yes: Your whole balance is at risk if this trade fails
3. Are you paying funding every 8 hours? If yes: Funding drains margin; recheck the liquidation price daily
4. Is a stop-loss set well before the liquidation price? If no: Set one: liquidation is the most expensive way out
5. Otherwise: Buffer looks managed: keep monitoring mark price and margin ratio

Diagram drawn by UXS. A simplified decision aid for education, not a recommendation.

Perpetual positions also pay or receive funding rates, which slowly change your margin balance.

Liquidation distance depends on leverage; see how much leverage is too much for a beginner.

Exchange solvency is a separate risk from liquidation; see what proof of reserves shows.

Liquidation cascades eat through visible depth quickly; see how to read a crypto order book.

Decision helper

Checklist before opening a leveraged crypto trade

1. Calculate the liquidation price before you click buy.
2. Place a stop-loss that triggers well before liquidation.
3. Size the trade so the stop costs a small share of the account; see how much to risk per trade.
4. Use isolated margin unless you understand cross margin fully.
5. Check the funding rate and the next funding time.
6. Avoid holding through major data releases with high leverage.
7. Watch the margin ratio, not just the profit and loss number.

Quick poll

What leverage do you use most often in crypto futures?

• 1–2x
• 3–5x
• 10–20x
• 50x or more
• I do not trade with leverage

Save my answer

What each answer means

• 1–2x: A move of roughly 50% or more against you is needed for liquidation at 2x. This mainly limits risk to normal drawdowns.
• 3–5x: Liquidation sits roughly 20–33% away. Crypto has moved that much in days, so a stop-loss is still essential.
• 10–20x: A 5–10% move can wipe the margin. Daily bitcoin swings of that size are not rare.
• 50x or more: Liquidation is within 0.5–2%. Ordinary noise, fees and funding can trigger it.
• I do not trade with leverage: You cannot be liquidated on a spot holding, although the price can still fall.

Your answer is stored only in this browser (localStorage). UXS does not collect, count or publish votes, so no totals are shown.

Common mistakes

• Treating the liquidation price as a stop-loss. It is the worst exit, often with an extra fee.
• Reading the last price on a chart instead of the exchange's mark price.
• Forgetting that unrealised losses on other positions count in cross margin.
• Adding margin repeatedly to a losing trade.
• Using maximum leverage because the exchange allows it. Our forex leverage page shows why effective leverage matters more than the maximum.

FAQ

Why did I get liquidated before price hit my level?

The exchange likely used its mark price, and fees or funding had reduced your margin, moving the liquidation price closer than when you opened.

Can I lose more than my margin?

Most crypto exchanges run insurance funds and auto-deleveraging to stop balances going negative, but rules vary. In cross margin you can lose your whole account balance.

Does a stop-loss prevent liquidation?

A stop placed before the liquidation price usually closes the trade first, but in fast markets it can fill at a worse price.

What is partial liquidation?

Some exchanges close part of a position to bring the margin ratio back above the requirement instead of closing all of it.

Is cross margin safer?

It spreads risk across the account and can delay liquidation, but one bad trade can drain everything.

Are crypto futures available to US retail traders?

Regulated futures on bitcoin and ether trade on CFTC-registered exchanges. Many offshore perpetual platforms are not registered in the US; check the CFTC's advisories.