In a unified account, the forced liquidation conditions for contracts are primarily based on the margin rate. When the margin rate of the contract position ≤ 0%, liquidation will be triggered.
Users can also calculate the specific forced liquidation price of their position through the "Calculator" on the contract page. However, in a unified account, if users open multiple contract positions, the estimated liquidation price may differ from the actual liquidation price.
1. What is the Margin Rate?
The margin rate is an indicator of the safety level of the position. The higher the margin rate, the safer the position is.
Margin Calculation
Position Margin = (Contract Face Value * Contract Quantity) / Leverage
Example: If you buy 50 BTC contracts (contract face value is 100 USDT) with a leverage of 20,
Position Margin = (100 * 50) / 20 = 250 USDT
Margin Rate Explanation
The margin rate is a measure of the risk of the user’s assets;
Margin Rate = (Account Equity / Occupied Margin) * 100% - Adjustment Coefficient;
Where: Occupied Margin = Position Margin + Frozen Margin
The lower the margin rate, the higher the account risk. When the margin rate is ≤ 0%, forced liquidation will occur.
2. What is Forced Liquidation (Forced Close)?
When the position moves in the opposite direction from the latest transaction price, forced liquidation will be triggered when the user’s margin rate is ≤ 0%.
After the forced liquidation is triggered, the forced liquidation engine will take over the liquidation position. Since the forced liquidation process does not go through the matching system, the takeover price will not be shown on the candlestick chart. At the same time, the takeover price is not equal to the actual forced liquidation price. The user’s forced liquidation loss will be equal to the loss when the margin rate of that position drops to 0. The maximum loss will not exceed the total margin of the liquidation position.