Frequently Asked Questions about Forced Liquidation

1. What is forced liquidation?

Forced liquidation occurs when the equity in a position’s margin account falls below a required level. To prevent further losses, the platform will automatically close the position.

2. Under what circumstances will forced liquidation be triggered?

When the maintenance margin ratio ≤ 100%, it indicates that the account equity is no longer sufficient to cover the maintenance margin and potential liquidation fees. In this case, the system will trigger forced liquidation. You are advised to closely monitor changes in the margin ratio.

For information on how to calculate the maintenance margin ratio, please refer to: What is margin in futures trading?

3. What is the process of forced liquidation?

Forced liquidation is not a single action. It generally involves the following stages: order cancellation, position reduction, and forced liquidation.

• Order cancellation:
  When the account risk exceeds a certain level but has not yet reached the position reduction threshold, the system will cancel some open orders to help restore the account to a safer state.

• Position reduction:
  Positions are reduced in stages. After part of the position is closed, the system will check whether the remaining position meets the maintenance margin ratio requirements for the new position tier. If the requirement is met, further position reduction will stop.

• Forced liquidation:
  If the maintenance margin requirements cannot be met during the position reduction process, the system will continue closing positions until all positions are fully liquidated.
  

4. Where can I check the liquidation price?

On the Positions & Assets page, the system displays the Estimated Liquidation Price (Liq. price) in the lower-right corner of each position. Please note that the estimated liquidation price is not the actual price at which liquidation will occur. It is only an estimate provided by the system. The actual liquidation or position reduction price is determined based on the mark price when the maintenance margin ratio is ≤ 100%.

5. What is the mark price?

The liquidation price is based on the mark price, rather than the last price or the index price. On the market page, you can click Last Price in the upper-left corner to switch the price type displayed on the candlestick chart. When checking whether a liquidation price has been reached, please refer to the Mark Price on the candlestick chart to confirm whether the price has reached the liquidation level.

6. How is the liquidation price calculated?

In addition to checking the Estimated Liquidation Price on the Positions & Assets page, you can also use the Calculator to calculate the liquidation price manually.

To access the calculator, go to the trading page and click “···” > Features > Calculator > Liquidation Price. Then, enter parameters such as leverage, entry price, and margin mode to calculate the liquidation price.

For detailed calculation formulas, please refer to: Futures mode: cross margin trading

Please note that in USDT cross margin mode, the estimated liquidation price cannot be calculated if there are two or more USDT futures or leveraged positions involving different trading pairs within the same cross margin account. In addition, if the cross margin account contains options positions or leveraged positions for non-USDT trading pairs, the estimated cross margin liquidation price will also be unavailable.

7. What fees are incurred during forced liquidation?

During the forced liquidation process, the following fees or costs may be incurred: liquidation fees and position reduction-related costs.

• Liquidation fee:
  The liquidation fee is calculated based on your current fee tier, using the applicable liquidation fee rate and the position value (rather than the margin).

Deleveraging Fee: After forced liquidation is triggered, a deleveraging fee corresponding to the reduced position's margin tiers maintenance margin will be charged. The maintenance margin for the position tiers is determined by the tier in which your reduced position falls, and this portion will be used to cover the losses from forced liquidation engine's order slippage. Any remaining amount will be injected into the insurance fund. If an overloss occurs and your account balance becomes negative, you will not be responsible for the loss; the insurance fund will cover it. Please refer to: Forced Liquidation Mechanism

• Position reduction-related costs:
  After forced liquidation is triggered, costs corresponding to the reduced position may be incurred based on the maintenance margin tier of the reduced position. The applicable maintenance margin tier is determined by the number of contracts reduced.

• These amounts are used to cover potential losses incurred by the liquidation mechanism during order execution. Any remaining amount, if applicable, will be transferred to the insurance fund. In the event of a deficit caused by forced liquidation, compensation may be provided by the insurance fund in accordance with the liquidation mechanism. For more details, please refer to article: Tiered maintenance margin ratio rules
  

8. Will my spot assets be affected if my futures is liquidated?

When a position is liquidated under cross margin mode, all margin allocated to the trading account may be lost. However, assets in the funding account are not affected.

When a position is liquidated under isolated margin mode, only the margin allocated to that specific position will be deducted. Assets in the funding account remain unaffected.