Glossary

Perp trading glossary

Liquidation Price

Liq price, liquidation level

The liquidation price is where your loss consumes nearly all posted margin and the exchange force-closes the position — plus a liquidation fee.

Definition

When a leveraged position moves against you far enough that the loss consumes almost all the margin backing it, the exchange closes it for you at the liquidation price and charges a liquidation fee. You don't choose it — it's implied by your entry, leverage, margin mode and the contract's maintenance-margin rate (MMR).

On Bybit liquidation triggers on the mark price, not the last traded price — so a brief wick on the mark can liquidate a position whose last price never reached the level.

Formula

Isolated long: liq = entry × (1 − 1/leverage + MMR) Isolated short: liq = entry × (1 + 1/leverage − MMR)

MMR is the maintenance-margin rate as a fraction (~0.4–0.5% for BTC/ETH, higher for alts). In cross margin, replace leverage with effective leverage = notional ÷ wallet equity — the leverage knob becomes only a position cap.

Worked example

Long BTCUSDT at $65,000, 10× isolated, MMR 0.5%: liq = 65,000 × (1 − 0.1 + 0.005) = $58,825, about 9.5% below entry. Keep your stop comfortably inside that — a stop parked past your liquidation price is no stop at all, because Bybit closes you first.

Why it matters

  • Cross margin is the dangerous mode — liquidation distance is set by notional ÷ wallet, not the leverage number, so a 5× cross position can liquidate before a 20× isolated one.
  • MMR is tiered by contract and size — the jump from BTC's ~0.5% to a low-cap's 2.5% is two full percent of liquidation distance.
  • Mark-price triggering means 0.5–1% wick-outs happen; keep at least a 2× buffer between your stop and your liquidation price.
  • Multi-day holds pull real liquidation 1–3% closer as funding accrues against the position.

Related