Liquidation: How to Calculate It and Avoid It
Calculate your liquidation price by hand and learn the habits that keep you away from it.
Liquidation is the exchange closing your position because your margin can no longer cover the loss. It is not a penalty someone chooses — it is automatic, and it happens before your account balance would go negative.
Maintenance margin
To keep a position open, its margin must stay above the maintenance margin. On Hyperliquid, the maintenance margin rate is half the initial margin at the coin's maximum leverage. BTC allows up to 40x, so the initial margin at max is 2.5% and the maintenance rate is 1.25% of the position value.
Liquidated when: margin + unrealized PnL ≤ position value × maintenance rate- Margin:
- What you posted (isolated) or your account equity (cross)
- Unrealized PnL:
- Measured at the mark price
- Maintenance rate:
- 1 ÷ (2 × max leverage) — 1.25% for a 40x market
| Margin posted | $60,000 ÷ 10 = $6,000 |
|---|---|
| Maintenance rate | 1 ÷ (2 × 40) = 1.25% |
| Condition at price P | 6,000 + (P − 60,000) = 0.0125 × P |
| Solve | P × 0.9875 = 54,000 → P ≈ $54,684 |
Liquidation comes at about an 8.9% drop — earlier than the 10% that "10x" suggests, because of the maintenance margin.
For a short the logic is mirrored: you are liquidated when the price rises far enough that your loss eats the margin down to the maintenance level. ChipaX shows the liquidation price for every open position in the Positions panel — use the formula to sanity-check it and to plan before you enter.
What moves your liquidation price
- Higher leverage → closer liquidation.
- Adding margin (isolated) or depositing more (cross) → further away.
- Funding payments and fees slowly reduce margin, nudging liquidation closer over time.
- In cross mode, losses on other positions bring this one closer too.
Habits that prevent liquidation
- Decide your stop-loss before you enter, and make sure it sits well before the liquidation price.
- Size the position from the stop (see the Risk Management course), then pick leverage — never the other way round.
- Keep effective leverage low enough that a normal day's volatility cannot reach your liquidation price.
- Check funding if you plan to hold for days.
Key takeaways
- You are liquidated when margin plus unrealized PnL falls to the maintenance margin.
- On Hyperliquid, maintenance rate = 1 ÷ (2 × max leverage).
- Your stop-loss should always trigger well before your liquidation price.