Contract liquidation price calculation formula

Contract liquidation price calculation formula: liquidation price = opening price / (1 ± liquidation ratio), where the liquidation ratio for forward positions is 1 - liquidation ratio, and the liquidation ratio for reverse positions is 1 + liquidation ratio . For example: the opening price is $100, the liquidation ratio is 20%, the liquidation price for long orders is $125, and the liquidation price for short orders is $83.33, that is, when the price drops to $125, long orders will be liquidated; The price rises to $83.33 and the short position will be closed.

Contract liquidation price calculation formula

Definition of liquidation:
Contract liquidation means that the contract position held by the trader is forced to be liquidated because the loss exceeds the account funds.

The liquidation price calculation formula:

爆仓价格 = 开仓价格 / (1 ± 爆仓比例)

Among them:

• Opening price: The price when the trader first opens a position
• Liquidation ratio: A ratio set by the exchange or platform , usually between 10% and 30%

Forward position (multiple) liquidation:

爆仓价格 = 开仓价格 / (1 - 爆仓比例)

• When the market price reaches or falls below this liquidation price, the long position will be forced to liquidate .

Reverse position (short order) liquidation:

爆仓价格 = 开仓价格 / (1 + 爆仓比例)

• When the market price reaches or is higher than this liquidation price, the short position will be forced to be liquidated.

Example:

Suppose a trader opens a BTC contract with $100, and the liquidation ratio is 20%:

• Long order liquidation price: $100/(1 - 20%) = $125
• Short order liquidation price: $100/(1 + 20%) = $83.33

This means:

• When the market price drops to $125 or below, long orders will be liquidated Forced liquidation.
• When the market price rises to $83.33 or above, short orders will be forced to close.

Please note that the liquidation price will continue to change with market price fluctuations. Traders need to monitor their positions closely and understand their liquidation risks.

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