Liquidation in futures trading: how does it work? 🔥

Liquidation. The forced closure of a trader's position when margin falls to a critical level. In September 2025, BTC reached approximately 120,000 USDT. Knowing the mechanisms of liquidation is more important now than ever 🚀

What happens during liquidation? 📊

• Protection against manipulation — the system uses fair price marking
• Larger positions = more margin. Logical?
• The system kills open orders. First them. Then you.
• Partial liquidation — it seems this saves large players from total ruin 🛡️

How the liquidation price is calculated 🧮

You are liquidated when: Margin + unrealized profit < Maintenance margin

Long:

Liquidation price = (Maintenance margin — Margin + Opening price × Size) / Size

Short:

Liquidation price = (Opening price × Size — Maintenance margin + Margin) / Size

Example from life 💡

Suppose you took a long 0.1 BTC at 120,000 USDT with a 25x leverage:

• Support Margin: 120,000 × 0.1 × 0.4% = 48 USDT
• Your margin: 120,000 × 0.1 / 25 = 480 USDT
• Liquidation will occur at: (48 - 480 + 120,000 × 0.1) / 0.1 = 116,480 USDT

Will the price drop to 116,480? Goodbye, money! 📉

Isolated vs Cross Margin 🔄

Isolated Margin

• The risk is only within the allocated amount
• You can add margin if it becomes scary.
• Calculated separately for each position

Cross-margin

• The entire balance becomes your protection
• But they don't touch the money from the wallet - it's not entirely clear why.
• With a larger margin, liquidation is further away. Seems obvious, right? 🌉

How Platforms Manage Risks 🛠️

In 2025, exchanges do not allow us to completely self-destruct:

• The larger the position, the more margin is needed.
• The system automatically adjusts bids
• You can set your risk limit, which is quite convenient 🔧

How to avoid liquidation 🌕

• Watch the liquidation price. Constantly.
• Add margin. Don't be greedy.
• Choose the right mode. Think with your head.
• Check risk limits. Especially with large bets.

Cryptocurrencies in 2025 are like a rollercoaster. Understanding liquidation can save your money. Or not. But it's better to know than to cry later 🚀