a liquidation price is the exact price at which a leveraged position no longer has enough margin to stay open, and the protocol closes it automatically. it is calculated from your entry price, leverage, collateral, and the maintenance margin requirement of the venue. cross the liquidation price by a single tick, and your position closes at a loss, leaving you with whatever margin survived the close (often zero).
in plain english
the liquidation price is the line in the sand. as long as the market stays on the right side of it, you live. cross it and you die. high leverage moves that line close to your entry. low leverage moves it far away. that is the entire game in one variable.
the simplified formula
for a long position with isolated margin and ignoring fees, the rough liquidation price is:
- long liquidation: entry price multiplied by (1 minus 1 divided by leverage).
- short liquidation: entry price multiplied by (1 plus 1 divided by leverage).
- maintenance margin requirements push the liquidation closer to entry than the naive formula suggests.
- funding costs and open fees eat into margin and move the liquidation level closer over time.
why liquidation prices exist
leverage means the protocol is fronting you exposure that is larger than your collateral. if the market moves against you and your collateral runs out, someone has to eat that loss. liquidation prevents that by closing the position before your collateral goes negative. without it, leveraged trading would not be possible at all.
how it shows up on uponly.win
every position card on uponly shows the live liquidation price relative to the current mark. because uponly defaults to 75x to 500x leverage, those prices are usually very close to entry, which is the entire point of arcade-style perps. when price ticks past liquidation on avantis, the on-chain market closes your position and that is the end of the run. for the bigger picture, see max leverage trading 101.
common confusions
liquidation price is not the same as stop-loss. a stop-loss is a user-defined order to close early. a liquidation is a protocol-enforced shutdown. you can have both. you can have neither. they trigger off different prices (stop usually uses last price, liquidation uses mark price), and they exist for different reasons.
- liquidation is automatic, stop-loss is optional.
- liquidation uses mark price, not last trade price, to prevent wick liquidations.
- partial liquidations exist on some venues but most perps liquidate the full position.
- in cross-margin, your other positions can drain to keep one position alive longer.
see also
- leverage definition
- margin definition
- mark price vs index price
- stop-loss vs take-profit
- isolated vs cross margin
want to see a live liquidation price react in real time? open uponly and watch the number move as the mark price moves. nothing makes the concept click faster than watching your own collateral defend it.