What Is Liquidation in Perpetual Trading?

Liquidation is the forced closure of a Crypto Futures position that happens when your margin falls below the maintenance margin required to keep it open. The exchange closes the position automatically at that point, and the margin backing it is forfeited according to the margin mode you're using. The higher the leverage used, the smaller the price move it takes to trigger liquidation, because leverage determines how much buffer sits between your entry price and the point where your margin runs out.

• Liquidation is triggered off the Mark Price — a weighted average across major global exchanges — not the last traded price, to reduce the chance of a short-lived spike causing an unnecessary liquidation.
• Example: a $50 margin position at 10x leverage controls $500 of exposure. A 10% adverse move wipes out the $50 margin. At 25x leverage, the same $50 margin controls $1,250 of exposure, so only a 4% adverse move triggers the same outcome.
• Whether liquidation affects only that position or your wider Futures balance depends on the margin mode — Isolated Margin caps the loss to that position's own margin, while Cross Margin can draw on your entire shared Futures balance.
• Margin call warnings precede liquidation in normal conditions, but in fast-moving markets a position can move from warning to liquidation quickly.
• Liquidation is the single biggest risk in leveraged perpetual trading — the higher the leverage, the thinner your buffer against ordinary price swings.

Related questions:

Q: What triggers liquidation in perpetual trading?
Liquidation is triggered when your margin balance falls below the maintenance margin required to keep a position open. The exchange closes it at the mark price, forfeiting margin below the maintenance threshold.

Q: Does higher leverage make liquidation more likely?
Yes. A position at 25x leverage can be liquidated by a move roughly a quarter the size of what it would take at 10x — leverage choice matters as much as direction.

Q: Is the last traded price used to trigger liquidation?
No. Liquidation uses the Mark Price, a weighted average across major global exchanges, to avoid triggering off brief price spikes on a single order book.

Q: Can liquidation happen without any warning first?
Normally no, but in fast-moving markets a position can move quickly from margin call territory to liquidation, which is why active monitoring matters more than notifications alone.

Q: Does liquidation always wipe out my entire Futures balance?
No. Isolated Margin limits the loss to that position's margin; Cross Margin can draw on your entire shared Futures balance across positions using that mode.