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How to calculate your liquidation price — the exchange’s arithmetic, not the shortcut

By TradingPrimer · Published 18 Sep 2026

How to use this guide: work through section two with your own entry price and leverage in front of you. The rest of the page explains the three things that then move the number you just calculated.

What is the exchange actually comparing?

A liquidation is not a price the exchange picks. It is the moment an inequality flips. Binance states the test in its own documentation as collateral = initial collateral + realised PnL + unrealised PnL < maintenance margin. In plain words: the money still backing the position has fallen below the minimum the venue insists on keeping.

So there are only two quantities to understand.

• Initial margin — what the position cost you to open. It is the notional value divided by your leverage. A 0.1 BTC position at 100,000 is 10,000 USDT of notional; at 20× that is 500 USDT locked up.
• Maintenance margin — the floor. Binance computes it as position value × maintenance margin rate − maintenance amount. For a BTCUSDT position under 300,000 USDT the rate is 0.40% and the maintenance amount is zero, so on our 10,000 USDT position the floor is 40 USDT.

The gap between them is everything you have. 500 minus 40 is 460 USDT, and 460 USDT of loss on a 10,000 USDT position is a 4.60% adverse move. That is the whole calculation. Everything below is either a shortcut to it or something that eats into it.

Notice what this means about maintenance margin, because most explanations get the direction wrong: it is not a cushion the exchange gives you. It is room the exchange takes away. You never get to use those last 40 USDT.

What is the formula, in the order you would type it?

Five steps, in the order the numbers appear on the order screen.

1. Notional. Size × entry price. 0.1 × 100,000 = 10,000 USDT.
2. Initial margin. Notional ÷ leverage. 10,000 ÷ 20 = 500 USDT.
3. Maintenance margin. Notional × rate − maintenance amount. 10,000 × 0.40% − 0 = 40 USDT.
4. Buffer, as a percentage. (Initial − maintenance) ÷ notional, which is the same as 1/leverage − the rate. (500 − 40) ÷ 10,000 = 4.60%.
5. Liquidation price. Entry × (1 − buffer) for a long. 100,000 × 0.954 = 95,400.

Short positions use entry × (1 + buffer): 100,000 × 1.046 = 104,600. Everything else is identical, which is worth noticing — the arithmetic has no opinion about direction.

Why is “1 ÷ leverage” wrong, and by how much?

The shortcut everybody repeats is that 10× leverage means a 10% move against you is fatal. It is step four with the maintenance rate dropped. That omission is harmless at low leverage and severe at high leverage, and the reason is arithmetic rather than opinion: you are subtracting a fixed 0.40% from a number that keeps getting smaller.

Read the last row again. At the maximum leverage Binance offers on BTCUSDT, the shortcut tells you that you can survive a 0.667% move when the truth is 0.267%. It is not slightly optimistic; it promises you two and a half times the room that exists. At 3× the same omission is worth 1.2% and you can ignore it.

How much of your room does one fee take?

The opening fee leaves your margin balance before the price has moved at all. Binance’s standard USDⓈ-M taker fee was 0.0500% in September 2026, so on a 10,000 USDT position that is 5 USDT. Five dollars sounds like nothing. Compare it against the buffer instead of against the notional and it stops sounding like nothing.

At 20× the fee costs you about one per cent of your survivable distance and you can round it away. At 150× it costs you almost a fifth of it, instantly, for the privilege of entering. Combine this with the previous table and the honest figure at 150× is 0.217% — against the 0.667% the shortcut advertises.

One caveat, because it decides whether this table applies to you: this assumes the position is the only money in your futures wallet, which is the usual beginner situation. If you hold spare balance alongside an isolated position, the fee comes out of that spare balance first and the buffer on the position itself is untouched.

Does the number change after you have opened the trade?

Yes, and this is the difference between a calculation and a promise. The figure the exchange prints next to your order is correct for the instant it is printed. Three things move it afterwards.

• Funding. Perpetual futures settle a funding payment at fixed intervals. Every payment you make leaves your margin balance, so your liquidation price creeps toward your entry while you sleep. Payments you receive push it away.
• Cross margin. In cross mode the buffer is not the margin of this position; it is your whole balance minus the maintenance requirement of everything you hold. Open a second trade and the first one’s liquidation price moves, even though you did not touch it. The formula above is for isolated positions only.
• Adding or removing margin. Topping up an isolated position pushes the price further away, which is the one lever you keep after entry.

So the practical rule is: calculate it before you enter, because that is when you can still change your mind, and treat the on-screen number afterwards as a readout rather than a guarantee.

Does position size change your liquidation price?

This is where the simple version stops being true, and it is worth knowing even though it will not affect most readers. The maintenance margin rate is not one number — it rises in brackets as your position grows, and the maximum leverage falls to match. Binance publishes the BTCUSDT brackets openly. Hold leverage constant at 10× and watch what size alone does:

Same entry, same leverage, same direction — and the survivable move shrinks from 9.600% to 8.660%, a tenth of your room, bought with nothing but size. The maintenance amount column is what stops the jump being brutal: it is a rebate that keeps the step between brackets smooth rather than cliff-like.

If your position is under 300,000 USDT, none of this applies and the flat 0.40% is your number. Which is the useful takeaway for almost everyone reading: the simple formula is exactly right for you, and the complication is somebody else’s problem.

What actually happens when the price gets there?

A common belief is that liquidation leaves you the maintenance margin — that the 40 USDT floor is money you get back. On Binance, at retail size, it is not.

Binance charges a Liquidation Clearance Fee on the notional value of the position, and for BTCUSDT that rate is 1.25%. On a 10,000 USDT position that is 125 USDT, charged against the 40 USDT that was still there. The fee is more than three times what is left. Binance describes the consequence in its own FAQ, noting that for smaller positions the effective maintenance margin may be lower than the clearance fee rate, so those positions can be bankrupt when they enter liquidation, regardless of the final clearing price.

Read plainly: at your size, liquidation on this venue means the whole margin, not most of it. That single fact should change how far you place a stop-loss from the liquidation price, because the difference between closing yourself and being closed is not 40 USDT — it is everything left in the position.

Venues differ sharply here, and the difference is worth two minutes before you commit. Hyperliquid publishes the opposite arrangement: a much higher maintenance requirement, and no clearance fee at all. Our side-by-side of Hyperliquid versus Binance futures works through both sets of numbers, and our exchange comparison covers which venue publishes what — the rates you need for this calculation are the ones most people never look up before they open an account.

Common mistakes

• Using 1 ÷ leverage as if it were the answer. Fine at 3×, dangerous at 50×, wrong by a factor of 2.5 at 150×.
• Assuming the rate is 0.5%. It is a reasonable placeholder and it is not your number. Look up the bracket table for the contract you are trading — on BTCUSDT it is 0.40%, and on smaller altcoin contracts it is often several times higher.
• Forgetting the opening fee. It leaves your margin before the trade begins, and above 100× it is a meaningful share of everything you have.
• Applying the isolated formula to a cross position. In cross margin the answer depends on positions you are not currently looking at.
• Treating the displayed liquidation price as fixed. Funding moves it every settlement.
• Setting a stop-loss at or beyond the liquidation price. It will never be reached — the exchange closes the position first, and charges you for doing it.
• Expecting the maintenance margin back. At retail size on Binance the clearance fee is larger than it, by more than three to one.
• Reusing last month’s numbers. Brackets, maximum leverage and fee rates all change. The figures here were read in September 2026 and are a worked example, not a live feed.

The next step is the one that makes all of this unnecessary most of the time: sizing the position from the risk you accept rather than from the leverage you are offered. What leverage actually lends you covers the decision itself, and the position size calculator does the arithmetic in the opposite direction — from a loss you are willing to take, back to a size.

Frequently asked questions

What is the formula for liquidation price?

For an isolated long: entry × (1 − 1/leverage + maintenance margin rate). For an isolated short: entry × (1 + 1/leverage − maintenance margin rate). The maintenance margin rate is published by the exchange per contract and per position size; on Binance’s BTCUSDT it is 0.40% for positions under 300,000 USDT.

Does 10× leverage mean a 10% move liquidates me?

Not quite, and the error runs against you. At 10× on BTCUSDT the real figure is 9.600% before fees, so you are liquidated slightly earlier than the shortcut suggests. At 125× the shortcut says 0.800% and the real figure is 0.400% — half of it.

Why is my liquidation price different from the one I calculated?

Four usual causes: you are in cross margin rather than isolated, so the buffer includes your whole balance; funding payments have moved it since you opened; fees were deducted from the margin; or your position is large enough to sit in a higher margin bracket with a higher maintenance rate.

Do I get my maintenance margin back after liquidation?

It depends on the venue and on your size. Binance charges a liquidation clearance fee on the notional — 1.25% on BTCUSDT — and states that for smaller positions the effective maintenance margin can be lower than that fee, which means the position is bankrupt on liquidation. Hyperliquid’s documentation states it charges no clearance fee and returns remaining collateral, but its maintenance requirement is much higher.

Can I set a stop-loss instead of relying on the liquidation price?

Yes, and that is the point of calculating it. A stop-loss you place yourself closes the position on your terms; a liquidation closes it on the exchange’s terms and charges a fee for doing so. Put the stop far enough inside the liquidation price that ordinary volatility cannot reach the liquidation first — which at very high leverage is impossible, and that is information about the leverage, not about the stop.

Is the liquidation price the same for long and short positions?

The distance is the same; the direction is not. With the same entry, leverage and rate, a long at 20× dies at 95,400 and a short at 20× dies at 104,600 — both 4.600% away from an entry of 100,000.