What is future's Estimated Liquidation Price (ELP)?
The Estimated Liquidation Price is that forced liquidation of your USD futures position will be triggered when the mark price reaches the specified Estimated Price in cross-margin mode.
BIT displays Estimated Liquidation Prices for USD perpetual under Regular risk mode. You can find it when opening a new position and in the position tab of an existing position.
Your positions will begin to get liquidated if your account total Margin Balance drops below the total Maintenance Margin (mm ratio >=100%). Please note liabilities, if you have any, will be automatically converted once account MB drops below 1.1*account MM (mm ratio >=90%) (Read more).
Note: If the estimated liquidation price is less than zero or exceeds five times the current mark price, it will not be displayed, indicating that the probability of liquidation is minimal.
In this example the user has a single long perp position of 2 BTC, with mark price = 18000 USD, total Margin Balance = 12,000 USD. The max price loss the position can sustain is, therefore:
Max. sustainable loss = USD total Margin Balance - account Maintenance Margin requirement = Size * (Mark price - ELP)
=12000-account MM requirement = 2*(18000-ELP) [equation 1]
Note that the account MM requirement is the sum of MM required for each individual position when this BTC perp is trading at its Estimated Liquidation Price. In this example, since the user holds only one position, the account MM requirement is the same as the MM required for long 2 BTC perp at ELP. Therefore we have:
Account MM requirement = (1.50% + |2| * 0.015%) * |2| * ELP [equation 2]
Combine equation 1 & 2, and solve for ELP:
I.e. The above position will start to get liquidated when its mark price falls to around 12186.45 USD.
Please note Estimated Liquidation Price under Unified Margin might keep changing as the available balance is shared across all your trading positions and liabilities. The actual liquidation price will depend on factors that cannot be known ahead of time, such as:
- Relative performance of different positions you hold
- Funding rate changes
- If you have non-USD collateral or liabilities, what happens to their prices
- Deposits or withdrawals you will make