📉💸 Guess who learned this simple math the hard way? Me. Blew up $600 because I didn't know my exact liquidation price. Don't be me. Here's the formula every futures trader NEEDS to know for a long position: Liquidation Price = Entry Price * [1 - (1/Leverage - Maintenance Margin Rate)].
Let's use real numbers. You have a $1000 account, going long BTC at $60,000. We'll use a Maintenance Margin Rate (MMR) of 0.5% (0.005).
**Scenario 1: 10x leverage.**
Your initial margin ratio is 1/10 = 0.10.
Liquidation Price = $60,000 * [1 - (0.10 - 0.005)] = $60,000 * [1 - 0.095] = $60,000 * 0.905 = $54,300.
**Scenario 2: Now, 20x leverage.**
Initial margin ratio is 1/20 = 0.05.
Liquidation Price = $60,000 * [1 - (0.05 - 0.005)] = $60,000 * [1 - 0.045] = $60,000 * 0.955 = $57,300.
See how a mere 10x...
Let's use real numbers. You have a $1000 account, going long BTC at $60,000. We'll use a Maintenance Margin Rate (MMR) of 0.5% (0.005).
**Scenario 1: 10x leverage.**
Your initial margin ratio is 1/10 = 0.10.
Liquidation Price = $60,000 * [1 - (0.10 - 0.005)] = $60,000 * [1 - 0.095] = $60,000 * 0.905 = $54,300.
**Scenario 2: Now, 20x leverage.**
Initial margin ratio is 1/20 = 0.05.
Liquidation Price = $60,000 * [1 - (0.05 - 0.005)] = $60,000 * [1 - 0.045] = $60,000 * 0.955 = $57,300.
See how a mere 10x...