What is the liquidation price?
The liquidation price for a given contract is an estimate of which mark price level can trigger a liquidation. This is only an estimate and should not be taken as static, as it can be impacted by a number of variables and you are responsible for monitoring your account balance and exposure to ensure you are taking the risk you are comfortable with.
How is the liquidation price determined?
A liquidation is triggered when the portfolio value of a futures margin wallet falls below the maintenance margin required for all open positions in the futures margin wallet. The estimated liquidation price for a contract in the margin wallet represents the mark price that, when reached, would result in the portfolio value falling below the maintenance margin level.
Where can I find my estimated liquidation price?
I have a long and a short position of the same size on different maturities within the same contract type, can I still be liquidated?
Yes, the mark prices of contracts within the same contract type can vary, which can lead to a loss in one contract that is not covered by a corresponding gain in another contract, resulting in a potential liquidation if the loss in one contract brings the portfolio value below maintenance margin.
The premium/discounts vary across maturities. The maximum premium/discount from the index price for perpetual futures contracts is 1% and the maximum premium/discount from the index price for fixed maturities is 20% at 210 days-to-maturity and 1% with 1 day to maturity and linearly interpolated in between.
For example, the Bitcoin Real Time Index (BRTI) is currently 35,000 and a trader has a short position in the perpetual contract and a long position in the fixed maturity, each with varying entry prices. In the fixed contract, there are ~87 days left to maturity, meaning that the mark price in the fixed market can drift as far away as ~8.82% from the index price (down to 31,913 or up to 38,087), whereas the perpetual contract can only drift as far away as 1% from the index price (down to 34,650 or up to 35,350)
If the price on the fixed contract dropped enough to bring the portfolio value below maintenance margin (even if the perpetual position were in profit), then all of the positions in that margin account would be liquidated. When managing risk on spread positions, it is important to account for these premium variations.
My liquidation price says N/A, does that mean that I cannot get liquidated?
No, it means that given your current account balance and at the current premium/discount levels a liquidation price cannot be determined.
What happens if I have a short position and long position in the same instrument (e.g. short BTCUSD perpetual and long BTCUSD quarterly) and the liquidation price on one of the positions is reached, will the other position remain open?
No, the margining for positions is based on the portfolio value of the same margin wallet (FI_BTCUSD in this example), and if the portfolio value drops below the maintenance margin in that wallet, all positions using that margin wallet will be liquidated.
Note: the exposure in one futures margin wallet does not affect others (e.g. FI_BTCUSD liquidation will not affect FI_ETHUSD positions, etc.)
More information on the liquidation process can be found in our Equity Protection Process.