# Liquidation Price

The liquidation price for a position is calculated based on the entry price and amount of collateral provided. The higher the leverage, the lower the collateral amount, therefore the higher the risk of liquidation.

{% hint style="warning" %}
To prevent your position from getting liquidated ALWAYS USE STOP LOSS orders.
{% endhint %}

Positions can only be liquidated using the Mark Price (the price from the price source). 

When a position is liquidated, the collateral for the position is not collected, only the taker fee.

### Liquidation Price Formula

$$
LP = NLP ± P \* C
$$

#### Definitions

| LP  | Liquidation Price                                                |
| --- | ---------------------------------------------------------------- |
| NLP | Net Liquidation Price                                            |
| P   | Entry Price                                                      |
| C   | Margin Call Coefficient                                          |
| M   | Margin (Collateral)                                              |
| MOV | Allowed price movement before margin call                        |
| FC  | Funding Cost                                                     |
| S   | Position Size                                                    |
| FB  | Funding Blocks (the number of blocks the position is opened for) |
| FR  | Funding Rate (rate per block)                                    |
| L   | Leverage                                                         |
| MM  | Maintenance Margin                                               |

#### Formulas

| Parameter | Formula            |
| --------- | ------------------ |
| NL        | P ± MOV            |
| MOV       | (M - FC) / S       |
| FC        | S \* P \* FB \* FR |
| C         | MM / L             |
| L         | P \* S / M         |

{% hint style="success" %}
Use Stop-Limit (Stop-Loss) orders to prevent the position from getting liquidated!
{% endhint %}


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