When the Margin Rate is ≥ 100% (i.e., margin + unrealized PnL ≤ maintenance margin), the position triggers liquidation.
Margin Rate = Maintenance Margin / (Margin + unrealized PnL)
The sum of Margin and unrealized PnL is referred to as Margin Equity in the following text.
- Maintenance Margin: the minimum Margin Equity required to maintain the position (calculation formula).
- Unrealized PnL: the unrealized profit or loss of the position, which is the main driving force for liquidation and is calculated using the Mark Price.
- Mark Price: The fair price of the futures is calculated using the futures market price and the spot price from major exchanges, which can avoid unnecessary liquidation caused by price manipulation.
In Isolated Margin mode, the position triggers liquidation when the Margin Equity falls to the maintenance margin level.
In Cross Margin mode, the position triggers liquidation when the futures account equity, after deducting the Isolated Margin Equity, falls to the maintenance margin level. Note that in Cross Margin mode, if a user holds both long and short positions, only the net position of both sides may trigger liquidation, while the locked portion is not affected.
Note that in Cross Margin mode, if a user holds both long and short positions of the same trading pair and does not meet the margin requirements, long and short positions are closed to offset with each other. If the margin requirements are met after this process, you will not enter the liquidation process.
For example:
You use 10 USDT with 100x leverage, opening a long position for 1 ETH when the ETHUSDT price is 1,000 U. The position value is 1,000 U. At this point (without considering fees):
- Margin = 10 USDT
- Maintenance margin = 5 USDT (calculation formula)
The position can withstand an unrealized loss of nearly 5 USDT, and the margin equity will be close to the maintenance margin (or the margin rate is close to 100%), which is about to trigger liquidation.
Using different margins and leverage to open the position, the amount of loss the position can withstand will vary. Note that if the position value remains the same, the maintenance margin will also remain the same:
- If using 10 USDT with 100x leverage: the notional value is 1000 USDT, the maintenance margin is 5 USDT, and the position can withstand a loss of nearly 5 USDT at most.
- If using 100 USDT with 10x leverage: the notional value is 1000 USDT, the maintenance margin is 5 USDT, and the position can withstand a loss of nearly 95 USDT at most.
-
If using 200 USDT with 5x leverage: the notional value is 1000 USDT, the maintenance margin is 5 USDT, and the position can withstand a loss of nearly 195 USDT at most.
Contents
Liquidation Fee
As the Margin Rate approaches 100%, the position approaches liquidation. Due to the liquidation fee (higher than the trading fee), it is recommended that you close the position yourself before liquidation occurs.
Liquidation Fee = Value of the position closed by liquidation * Liquidation fee ratio of the trading pair
For example:
You hold a long position in BTCUSDT worth 20,000 USDT, and the Margin Rate is close to 100%, indicating that the position is about to be liquidated.
- If you voluntarily close the position at the market price before liquidation occurs, the trading fee ratio is up to 0.05%, and the trading fee is no more than 20,000 * 0.05% = 10 USDT.
- If you do not close the position voluntarily, and the position is completely liquidated, the liquidation fee ratio is 1.75%, and you will be charged 20,000 * 1.75% = 350 USDT.
It can be seen that the liquidation fee is much higher than the trading fee. It is recommended that you strictly control your position risk, close the position voluntarily, and try to avoid liquidation.
The fee ratios in the document may not be the latest data. Please refer to the APP for the latest data:
Liquidation fee ratio: [Markets] - [Futures] - [BTCUSDT] - [Information] - [Details] - [Liquidation Fee Ratio].
Trading fee ratio: [My Account] - [VIP Badge] - [Details] - [My VIP Level].
Liq. Price (Liquidation Price)
You can also refer to the Liq. Price to judge the liquidation. The closer the Mark Price is to the Liq. Price, the closer the position is to being liquidated.
Exchange of funding fees, opening or closing of positions, transferring assets, and increasing or decreasing margin can all lead to changes in the Est. Liq. Price, please pay attention.
We will notify you of Margin Call (when the Margin Rate ≥ 80%) and Liquidation (when the Margin Rate ≥ 100%) through mobile app notifications, message center, email, and SMS. This notification serves as a risk warning, and we cannot guarantee timely delivery. In some cases, during your use of the service (including due to network congestion or a poor network environment), you may not receive or may experience delayed notification. Pionex reserves the right to send notifications, but has no obligation to do so.
Liquidation Process
When the maintenance margin rate is ≥ 100%, liquidation will be triggered.
When the notional value level of the position is in the second tier or higher, partial liquidation will be attempted to try to reduce the maintenance margin rate and avoid full liquidation of the position.
You can view the notional value level of the position on the [Markets] - [Futures] - [BTCUSDT] - [Information] - [Leverage & Margin].
In isolated margin mode
If the notional value level of the position is in the second tier or higher:
- Attempt partial liquidation: the system submits a batch of closing orders, and the total value of the orders is the amount of positions needed to be closed to achieve “margin rate < 100%”. If the margin rate is < 100% after that, the liquidation will stop.
- If the margin rate is still ≥ 100% after that, the position will be taken over by the liquidation engine at the current mark price, and all contract orders for the trading pair will be canceled.
If the notional value level of the position is in the first tier:
- The position will be taken over by the forced liquidation engine at the current mark price, and all contract orders for the currency pair will be canceled.
In cross margin mode
First, attempt to reduce the margin rate by canceling orders or closing positions of the same trading pair:
- Cancel all contract orders to release the margin. If the margin rate is < 100%, the liquidation will stop.
- The long and short positions of the same trading pair are closed to offset with each other. If the margin rate is < 100%, the forced liquidation will stop.
- If the margin rate is still ≥ 100% at this time, partial liquidation will be attempted.
If there are positions with a notional value level in the second tier or higher:
- Attempt partial liquidation, order the positions by notional value level from high to low, and prioritize closing positions with higher notional value levels: the system submits a batch of closing orders, and the total value of the orders is the amount of positions needed to be closed to achieve “margin rate < 100%”. If the margin rate is < 100% after that, the liquidation will stop.
- If the margin rate is still ≥ 100% after that, all positions will be taken over by the liquidation engine at the current mark price.
If the notional value level of the position is in the first tier:
- All positions will be taken over by the forced liquidation engine at the current mark price.
Note: The execution price of the takeover order will not be displayed on the K-line.
Insurance Fund
After the account positions have been taken over at the mark price, if the remaining funds are negative, which means you are unable to pay the opponent’s profit, the Insurance Fund will make up for this loss to ensure that the opponent can receive all the profits and return your remaining funds to 0.
The sources of the Insurance Fund are:
- The initial funds were provided by Pionex.
- All liquidation fees.
Disclaimer: The numbers in this article may not be the latest and are subject to change without notice.
Please get in touch with Pionex Support if you have any other questions.
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