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What Is Liquidation Price? How to Avoid Liquidation in Perps

Liquidation price is the price level at which a perpetual futures exchange automatically closes your position because your remaining margin has fallen to the maintenance threshold. When the market hits this price, you lose the collateral allocated to that trade.

Quick Formula​

Long: Liquidation Price ≈ Entry Price × (1 − 1/Leverage) Short: Liquidation Price ≈ Entry Price × (1 + 1/Leverage)

Higher leverage brings the liquidation price closer to your entry, leaving less room for the market to move against you.

How to Avoid Liquidation​

  • Use lower leverage — 5x gives ~20% of breathing room; 40x gives only ~2.5%
  • Add margin — depositing more USDC pushes the liquidation price further away
  • Set a stop-loss above your liquidation price for longs (below for shorts)
  • Size positions conservatively — never risk more than 1-2% of your account on one trade
  • Understand cross vs isolated margin — isolated limits losses to one trade; cross uses your full balance

To check your liquidation price for any entry, leverage, and margin setup, use the liquidation price calculator.

For a full walkthrough including partial vs. full liquidation, cascading liquidations, maintenance margin tiers, and worked examples, see How Liquidation Works.