Key takeaways
- The mark price triggers liquidation, not the last traded price. Flipster’s terms define the mark price as the fair market value of the contract, as calculated by Flipster.
- More leverage puts the liquidation price closer to the entry price: with an assumed maintenance margin rate of 0.5%, a 5x long is liquidated about 19.5% below entry and a 2x long about 49.5% below.
- In cross margin the level is not fixed. It moves with the profit, loss and funding of every position that shares the margin.
- On Flipster a position is closed without prior notice, and a liquidation fee equal to half of its maintenance margin is charged (Derivatives Trading Terms, last updated 13 February 2026).
- Any figure you work out yourself, by hand or with a calculator, is an estimate. The liquidation price shown by the exchange is the one that applies.
Liquidation price in one paragraph
A liquidation price is the price at which an exchange closes a leveraged position for you, whether you want it closed or not. A leveraged position is backed by a limited amount of margin. When losses shrink that margin to the minimum the exchange requires, called the maintenance margin, the exchange closes the position so that the loss does not outgrow the collateral. On perpetual futures the test is made against the mark price. Flipster’s Derivatives Trading Terms, last updated on 13 February 2026, define the Liquidation Price as the price at which liquidation occurs, calculated by Flipster at its sole discretion. The number on the platform is therefore the binding one, and every formula in this guide approximates it.
This page belongs to the Flipster Learn guides to margin and liquidation. It explains the terms, gives the formula with worked examples, sets out what Flipster’s published rules say happens at liquidation, and ends with practical ways to keep your distance from the level.
Initial margin, maintenance margin and leverage
Three quantities set a liquidation price: the initial margin you post, the maintenance margin the exchange requires, and the leverage that ties both to the size of the position. The definitions below follow Flipster’s margin guide and Derivatives Trading Terms, both read on 11 October 2026.
- Initial margin is the collateral placed to open a leveraged position. The terms add that Flipster sets the minimum amount. In single-asset mode only Trading Bonus and USDT can be used as initial margin; cross-asset mode draws on a list of marginable assets.
- Maintenance margin is the minimum collateral a position needs to stay open. Beyond that point liquidation occurs.
- Leverage is the notional value of the position divided by the margin behind it. A 6,000 USDT position opened with 1,200 USDT of margin uses five times leverage, written 5x.
- Margin buffer is our shorthand for initial margin minus maintenance margin: the loss a position can absorb before it is liquidated.
Leverage does not change how much a position gains or loses for a given price move. It changes how much of your own money stands behind the position, and so how small a move is enough to use it up. The two-level structure is not specific to crypto: the CFTC futures glossary describes initial margin as the amount required when a futures position is opened and maintenance margin as the amount that must be kept on deposit at all times.
One difference matters. In the glossary’s traditional model a broker issues a margin call when the account falls to the maintenance level. Flipster’s terms say it may make a margin call but is not obliged to, and that it need not give notice before liquidation. Flipster may also change the maximum leverage, initial margin and maintenance margin requirements from time to time (clause 4.1.3).
The liquidation price formula
For an isolated position the liquidation price follows from one condition: the margin left after the loss equals the maintenance margin. Solving that condition for the price gives a formula with three inputs: entry price, leverage and maintenance margin rate.
Isolated long: liquidation price = entry price x (1 - 1/leverage + maintenance margin rate)
Estimate only; venues use tiered maintenance margin, mark price and insurance-fund rules that change the real liquidation level.
Isolated long position
A long position loses when the price falls, so its liquidation price is below the entry price. In the formula, 1/leverage is the initial margin as a share of the position: 20% at 5x. The maintenance margin rate is added back because the position is closed while the maintenance margin is still intact, not when the margin reaches zero.
The percentage distance between entry and liquidation is therefore 1/leverage minus the maintenance margin rate, whatever the entry price.
Isolated short position
Isolated short: liquidation price = entry price x (1 + 1/leverage - maintenance margin rate)
A short position loses when the price rises, so the signs flip and the level sits above the entry price. A falling price stops at zero, but a rising price has no ceiling, which is one reason the terms warn that losses on derivatives can be larger than the amount put in.
Why the venue’s figure can differ
The formula is a simplification, and the figure an exchange shows will usually differ from it by a small amount. It leaves out four things:
- trading fees, which are charged on the notional value and reduce margin when a position is opened and closed;
- funding payments, which are added to or taken from margin at each funding time;
- maintenance margin tiers: venues apply higher rates to larger positions, and the formula uses a single rate;
- the reference price: liquidation is tested against the mark price, not against the price of your last fill.
What we could not verify
Flipster’s maintenance margin tiers. Each contract has a “Leverage and margin” table on its trading-rules page, but its values are loaded by script and could not be read for this guide, so no Flipster tier is printed here and the examples use an assumed rate. The interface text of that table gives the shape of the calculation: maintenance margin = notional position value x maintenance margin rate - maintenance amount, with the rate set by the tier of the position size.
Worked examples
With an entry price of 60,000 USDT and an assumed maintenance margin rate of 0.5%, an isolated 5x long is liquidated near 48,300 USDT and a 2x long near 30,300 USDT. Every number in this section is illustrative: the entry price is a round figure chosen for the arithmetic, not a market level or a forecast, and 0.5% is an assumption, not a Flipster tier.
| Position | Estimate | From entry | Calculation |
|---|---|---|---|
| Long, 2x | 30,300 USDT | 49.5% below | 60,000 x (1 - 0.5 + 0.005) |
| Long, 5x | 48,300 USDT | 19.5% below | 60,000 x (1 - 0.2 + 0.005) |
| Short, 5x | 71,700 USDT | 19.5% above | 60,000 x (1 + 0.2 - 0.005) |
Long at two times and five times leverage
At 5x, a long position has a buffer of 19.5% of the entry price. The arithmetic for a position of 0.1 BTC runs as follows.
Worked example: 5x isolated long, 0.1 BTC at 60,000 USDT
- Position notional, 0.1 x 60,000
- 6,000 USDT
- Initial margin, 6,000 / 5
- 1,200 USDT
- Maintenance margin, 0.5% (assumption)
- 30 USDT
- Margin buffer, 1,200 - 30
- 1,170 USDT
- Price fall that uses the buffer, 1,170 / 0.1
- 11,700 USDT
- Estimated liquidation price, 60,000 - 11,700
- 48,300 USDT
Illustration only. The formula gives the same result: 60,000 x (1 - 0.2 + 0.005) = 48,300.
At 2x the same position needs 3,000 USDT of initial margin instead of 1,200 USDT. The buffer grows to 2,970 USDT, the price can fall by 29,700 USDT, and the estimate drops to 30,300 USDT, 49.5% below entry. Lower leverage buys distance at the cost of tying up more collateral. At 3x the distance would be about 32.8%.
Short at five times leverage
A 5x short opened at 60,000 USDT is liquidated near 71,700 USDT, 19.5% above entry. The buffer on 0.1 BTC is the same 1,170 USDT; it is used up by a rise of 11,700 USDT instead of a fall.
Mark price, not last price, triggers liquidation
Liquidation is tested against the mark price, an exchange-calculated fair value of the contract, and not against the last trade in the order book. Clause 4.1.5 of Flipster’s Derivatives Trading Terms states the trigger: when the mark price of a position hits its liquidation price, the position is closed out automatically.
The BTCUSDT.PERP contract page, read on 11 October 2026, lists the mark method as fair price. It describes the index price as an average of the last prices from several major exchanges, updated per second, and names eight constituents for the BTC index: Binance, Bitget, Bybit, Coinbase Pro, Gate.io, KuCoin, MEXC and OKX.
Anchoring the mark price to several venues limits the effect of one bad print. A single off-market trade moves the last price on one order book, but it is one input among eight in the index. Two practical consequences follow:
- The last traded price on a chart can touch your liquidation level for a moment without a liquidation, because the mark price did not reach it.
- The reverse also happens: the mark price can reach the level while the last traded price has not, for example when the contract trades at a premium or a discount to the index.
Judge how close a position is to liquidation by the mark price, not by the last price on the chart. The terms define the mark price as the fair market value of the contract, as calculated by Flipster.
Isolated margin and cross margin
Margin mode decides how much collateral stands behind a position, and Flipster offers both modes. In isolated margin, margin is allocated to each position and is not shared: if one isolated position is liquidated, the others are not affected. In cross margin, margin is shared across all cross positions, and a liquidation may affect all of them (Flipster margin guide, read on 11 October 2026). The formula above applies to isolated positions. The product page sets out the margin modes and liquidation rules for Flipster perpetual futures. Positions opened through copy trading sit in your own account and carry the same risk: see how liquidation applies to copied positions.
Why a cross-margin liquidation price keeps moving
A cross-margin liquidation price moves because the margin behind the position changes whenever anything in the account changes. Three things move it:
- unrealised profit or loss on your other cross positions, which raises or lowers the shared margin;
- funding payments and fees, which are settled against the same balance (the funding guide explains how funding payments reduce margin over time);
- collateral you add or withdraw, and positions you open or close.
This is the usual answer to “why does my liquidation price change” when you have not touched the position itself. In isolated margin the level moves only when you add margin, change the position size, or the exchange changes its requirements.
What happens when a position is liquidated on Flipster
On Flipster, liquidation is automatic and comes without prior notice. The sequence below is taken from clauses 4.1.5 to 4.1.8 of the Derivatives Trading Terms, last updated on 13 February 2026, and from section 4.4 of the margin guide.
Trigger. The mark price of the position hits the liquidation price.
Automatic close-out. Flipster closes the position. It is not required to give notice first.
Unwinding. A Backstop Liquidity Provider automatically unwinds the position.
Liquidation fee. A fee equal to half of the maintenance margin of the liquidated position is charged to the account balance.
Insurance Fund. If the remaining margin is greater than the fee, the difference is paid into the Insurance Fund. If it is less, the Insurance Fund is used to offload the position.
Counterparty liquidation. If the Insurance Fund cannot take the position, for example in extreme volatility or after depletion, a profitable position of another user may be closed.
The service runs 24 hours a day, 7 days a week, and the terms say margin calls and liquidations can occur at any time, including outside normal business hours (clause 4.2). Under clause 4.1.2, monitoring your margin balance is your sole responsibility.
Liquidation fee
The liquidation fee is half of the maintenance margin of the liquidated position. In the illustrative 5x long above, the assumed maintenance margin is 30 USDT, so the fee would be 15 USDT. It comes on top of the trading fees charged on notional value.
Read together, clauses 4.1.5 and 4.1.6 leave nothing of an isolated position’s margin to come back after liquidation: the price move uses up the buffer, the fee takes half of the maintenance margin, and the terms send any margin remaining above the fee to the Insurance Fund.
Insurance fund
The Insurance Fund is a fund maintained by Flipster whose stated primary purpose is to limit counterparty liquidations (clause 4.1.6). The margin guide describes its role for a long position: if the liquidated position is executed above the bankruptcy price, the margin that remains goes into the fund; if it is executed below, the fund covers the loss. Flipster may also apply the fund for other purposes it considers necessary (clause 4.1.9). Neither document states the size of the fund, and nothing in them describes it as compensation for a trader’s own losses.
Auto-deleveraging
Auto-deleveraging is the last step: when the Insurance Fund cannot absorb a liquidated position, a profitable position on the other side is closed to cover it. Flipster’s terms call this counterparty liquidation and refer to clause 12.17 of the Terms of Use for the procedure, and the BTCUSDT.PERP contract page lists auto-deleveraging as enabled. For a trader this means a profitable position can be closed early by a liquidation that started in someone else’s account.
Bankruptcy price and liquidation price
The bankruptcy price is the price at which a position’s margin is fully used up; the liquidation price comes earlier, at the point where only the maintenance margin is left. In the illustrative 5x long, the bankruptcy price is 60,000 x (1 - 0.2) = 48,000 USDT and the liquidation estimate is 48,300 USDT. The 300 USDT between them is the assumed 0.5% of the entry price.
Liquidation starts when only the maintenance margin is left. Bankruptcy is when nothing is left.
What happens between the two levels decides who bears the result. In the margin guide’s terms, a liquidated long that is executed above the bankruptcy price leaves margin, which goes to the Insurance Fund, and one executed below it produces a loss that the Insurance Fund covers. The glossary has short definitions of maintenance margin, bankruptcy price and auto-deleveraging.
How to avoid liquidation
You avoid liquidation by keeping a wide gap between the mark price and your liquidation price, and there are four practical ways to do it. None of them removes the risk: they lower the chance that an ordinary price swing reaches the level.
Use less leverage
Lower leverage is the most direct control, because the distance to liquidation is roughly 1/leverage minus the maintenance margin rate. With the assumed 0.5% rate that is 19.5% at 5x, about 32.8% at 3x and 49.5% at 2x. Choose the multiple from the price swing you want the position to survive, not from the maximum a venue offers.
Keep a margin buffer
Margin added early moves the liquidation price away while the decision is still yours. Add collateral before the mark price gets close, not after, and keep spare funds that are not already committed to other positions. Isolated margin suits a speculative position because it limits the collateral that one position can draw on. In cross margin a single losing position can pull the liquidation level of every other position closer.
Set a stop-loss before the liquidation level
A stop-loss placed between the entry price and the liquidation price closes the position on your terms before the exchange does, which avoids the liquidation fee and leaves the remaining margin in your account. Two cautions apply. Flipster’s margin guide describes trigger orders and stop-loss settings as conditional market orders based on a specified mid price of the contract, while liquidation follows the mark price, so the two can be watching different numbers. And a market order fills at the price available: in a fast move or a gap, the fill can be worse than the stop, or the price can pass the stop and the liquidation level together. The TradFi page explains gap risk on stock and gold perpetuals.
Watch funding and position size
When you are on the paying side of funding, each payment comes out of margin, so a position held for a long time drifts towards its liquidation price even if the market does not move. BTCUSDT.PERP exchanges funding every 8 hours, at 00:00, 08:00 and 16:00 UTC, with a funding cap of 0.3000% (contract page, read on 11 October 2026). A payment at the cap on the 6,000 USDT example would be 18 USDT, or 1.5% of the 1,200 USDT margin. That is the ceiling, not a typical payment. Trading fees are charged on notional too: at the entry-tier taker rate of 0.06% in Flipster’s fee guide, opening the same position costs 3.60 USDT.
Position size matters for a second reason: venues apply higher maintenance rates to larger positions, which pulls the liquidation price closer. A smaller position at the same leverage is easier to defend.
Derivatives trading can still lead to losses larger than the amount you put in. Read the full risk disclosure before you trade.
Read the margin and liquidation rules for Flipster perpetuals
Check the estimate before you open a position
You can check a liquidation estimate by hand in three steps before you place an order. This page has no calculator and runs no script, so the check works on paper.
Fill in the formula. Use your own entry price, your leverage and an assumed maintenance margin rate, as in the example below.
Compare with the platform. Set your result against the liquidation price Flipster shows for the position. If the two differ, the platform’s figure is the one that applies.
Look up the tier. Open the “Leverage and margin” table on the contract’s trading-rules page, for example flipster.io/support/trading-rules/contract/BTCUSDT.PERP, find the maintenance margin tier for your position size, and repeat step 1 with that rate.
Filled-in example for step 1: isolated long
- Entry price
- 2,500 USDT
- Leverage
- 4x
- Maintenance margin rate (assumption)
- 0.5%
- Calculation
- 2,500 x (1 - 0.25 + 0.005)
- Estimated liquidation price
- 1,887.50 USDT
24.5% below the entry price. Illustration only: the entry price is a round number, not a market level.
Estimate only; venues use tiered maintenance margin, mark price and insurance-fund rules that change the real liquidation level.
Leverage limits set by regulators
Several regulators cap retail leverage on crypto derivatives at low multiples, or ban the products for retail clients altogether. The three rules below were read at their sources on 11 October 2026.
| Jurisdiction | Rule | For retail clients | Source |
|---|---|---|---|
| Dubai | VARA Exchange Services Rulebook, Part V, section G, rule 8 | Leverage on exchange-traded derivative services not above 5-to-1; minimum initial margin 20% | Dubai rulebook, section G |
| European Union | ESMA measures on contracts for differences, agreed on 27 March 2018 | Leverage limit of 2:1 for cryptocurrencies; margin close-out at 50% of the minimum required margin; negative balance protection | ESMA release, 27 March 2018 |
| United Kingdom | FCA Policy Statement PS20/10, rules in force from 6 January 2021 | Sale, marketing and distribution of derivatives and exchange traded notes that reference certain cryptoassets is prohibited | FCA PS20/10 page |
Limits depend on where you live and on the entity that serves you. The Dubai rule comes from the Virtual Assets Regulatory Authority (VARA), which licenses Flipster FZE for Exchange Services under VASP Licence VL/26/07/002. That company’s public disclosure describes spot trading only, and nothing in the sources shows that it offers perpetual futures. The global platform is operated by Flipster Corp, for which the site states no regulator: see the companies behind Flipster.
The ESMA measures were temporary and renewable when they were agreed, so check your national regulator for the rule in force today. A leverage cap also says nothing about whether a venue can pay out what it owes, which is a separate question covered in the guide to checking that an exchange holds client assets.
Liquidation price FAQ
What does liquidation price mean?
A liquidation price is the price at which an exchange closes a leveraged position automatically because the margin left in it has fallen to the maintenance margin. On perpetual futures the level is compared with the mark price, not with the last traded price. On Flipster the liquidation price is the figure calculated by Flipster, so the number on the platform takes precedence over any estimate.
How do I calculate my liquidation price?
For an isolated long position, multiply the entry price by (1 - 1/leverage + maintenance margin rate); for an isolated short, multiply it by (1 + 1/leverage - maintenance margin rate). With an entry price of 60,000 USDT, 5x leverage and an assumed rate of 0.5%, the long estimate is 48,300 USDT. Treat the result as an estimate: fees, funding and tiered maintenance margin change the real level.
Why did my liquidation price change?
Your liquidation price changes when the margin behind the position changes. In cross margin that happens whenever another position gains or loses, when funding is paid or received, and when you add or withdraw collateral. In isolated margin it moves when you add margin to the position or change its size. The exchange can also change its margin requirements from time to time.
Can I lose more than my margin?
Yes, it is possible. Flipster’s Derivatives Trading Terms warn that the amount you lose is not capped at what you put in and “can exceed the amount which you originally deposit with us”. Isolated margin allocates a set amount to one position, and the margin guide says a loss beyond the bankruptcy price is covered by the Insurance Fund, but the terms do not promise that your loss stops at your margin.
Does a stop-loss prevent liquidation?
No. A stop-loss lowers the chance of liquidation but does not prevent it. A stop placed between the entry price and the liquidation price closes the position first in an orderly market. In a gap or a very fast move the price can pass both levels before the stop is filled, and the stop may follow a different reference price from the mark price that triggers liquidation.
Sources
- Flipster Derivatives Trading Terms, last updated 13 February 2026 (definitions, clauses 4.1.2 to 4.1.9, 4.2 and 4.3, risk disclosure): flipster.io/policies/derivatives, accessed 2026-10-11.
- Flipster guide to margin trading, sections 4.1 to 4.7: flipster.io/support/guide/margin-trading, accessed 2026-10-11.
- Flipster trading rules, BTCUSDT.PERP contract page (mark method, index constituents, funding, auto-deleveraging): flipster.io/support/trading-rules/contract/BTCUSDT.PERP, accessed 2026-10-11.
- Flipster guide to fees, section 7.1 (trading fee formula and VIP0 rates): flipster.io/support/guide/fees, accessed 2026-10-11.
- VARA Exchange Services Rulebook, Part V (Exchange Traded Derivative Services Rules), section G: margin and leverage limits in the VARA rulebook, accessed 2026-10-11.
- European Securities and Markets Authority, press release of 27 March 2018: ESMA agrees to prohibit binary options and restrict CFDs, accessed 2026-10-11.
- Financial Conduct Authority, PS20/10: prohibiting the sale to retail clients of investment products that reference cryptoassets, accessed 2026-10-11.
- Commodity Futures Trading Commission, Futures Glossary (margin, margin call, forced liquidation): CFTC glossary of futures terms, accessed 2026-10-11.
For information only. Not investment advice. The examples on this page are illustrations with assumed inputs, not forecasts or recommendations.