What is Forced Liquidation?
In futures trading, forced liquidation occurs when the margin in a user’s account is insufficient to maintain their open positions. To prevent further losses and protect user funds, the system will automatically close part or all of the positions once the account reaches the forced liquidation price.
In simple terms, when market prices fluctuate and reach the forced liquidation price of a position, and the available margin is not enough to meet the Maintenance Margin requirement, the Bitunix system will execute forced liquidation. This ensures that the account does not fall into debt.
Trigger Conditions and Calculation Rules for Forced Liquidation
1、In Isolated Margin Mode
The risks of long and short positions are calculated separately. When a user is forced to liquidate, only the margin allocated to that specific position will be lost. Profits and losses from each position are settled independently into the corresponding margin account.
Example: Assume the user opens a long position with a principal of 500 USDT at 100x leverage when the BTC price is 100,000 USDT, with a total initial margin of 1000 USDT. If the market suddenly drops, and without considering funding rates or handling fees, the liquidation price can be calculated as follows.
| Parameter | Specific Value / Description |
| Opening Direction and Price | Long position (bullish on BTC), opening price = 100,000 USDT/BTC (1 BTC = 100,000 USDT) |
| Isolated Margin | 500 USDT (user’s own capital allocated to this position) |
| Leverage | 100x (Bitunix BTC perpetual contract, matching the required Maintenance Margin Rate) |
| Key Rule Premise | Excluding handling fees and funding rates. The maintenance margin rate for Bitunix 100x BTC futures is 0.5% (standard platform setting, not applicable to extreme market conditions). |
Click for reference: Maintenance Margin Rate
Calculation:
- Contract Value = 500 USDT (margin) × 100 (leverage) = 50,000 USDT
- Maintenance Margin = 50,000 USDT × 0.5% = 250 USDT
Since the margin for each position is 500 USDT and the Maintenance Margin is 250 USDT, the maximum acceptable loss = Margin − Maintenance Margin = 500 USDT − 250 USDT = 250 USDT.
This is your liquidation threshold: Account equity must be ≥ 250 USDT, otherwise the position will be liquidated (excluding fees and funding rates).
Liquidation Price FormulaLiquidation Price = 100,000 USDT × [1 – (500 USDT – 500 USDT × 100 × 0.5%) ÷ (500 USDT × 100)]
100,000 USDT × [1 – (500 USDT – 250 USDT) ÷ (500 USDT × 100)]
100,000 USDT × [1 – 250 USDT ÷ 50,000 USDT]
100,000 USDT × [1 – 0.005]
100,000 USDT × 0.99505 = 99,505 USDT(excluding fees and funding rates)
Explanation:
When the BTC price falls to 99,505 USDT, the 500 USDT margin allocated to this isolated position will be liquidated. The remaining 500 USDT balance in the account will not be affected.
In real trading, it is recommended to set stop-loss orders (for example, a stop-loss at 99,600 USDT) to prevent passive liquidation that could result in a total loss of your margin.
2、In Cross Margin Mode
All available funds in the futures account are treated as margin. A position will only be liquidated if the losses exceed the total account balance. This gives the account a stronger ability to absorb losses, making it easier to manage and calculate positions.
Example: Assume the user opens a long position with 500 USDT as margin at 100x leverage when the BTC price is 100,000 USDT. The initial account balance is 1,000 USDT. If the market suddenly falls, without adding extra funds, the liquidation price can be calculated as follows.
| Parameter | Specific Value / Description |
| Opening Direction and Price | Long position (bullish on BTC), Opening price = 100,000 USDT/BTC (1 BTC = 100,000 USDT) |
| Initial Capital (Margin) | 1,000 USDT (user’s own capital allocated to this position) |
| Leverage | 100x (Bitunix BTC perpetual contract, matching the required Maintenance Margin Rate) |
| Key Rule Premise | Excluding handling fees and funding rates. The maintenance margin rate for Bitunix 100x BTC futures is 0.5% (standard platform setting, not applicable to extreme market conditions). |
Click for reference: Maintenance Margin Rate
Calculation:
- Contract Value = 500 USDT (margin) × 100 (leverage) = 50,000 USDT
- Maintenance Margin = 50,000 USDT × 0.5% = 250 USDT
Since the initial principal is 1000 USDT and the Maintenance Margin is 250 USDT, the maximum acceptable loss is:
Initial Principal – Maintenance Margin = 1000 USDT – 250 USDT = 750 USDT
This is your liquidation threshold: Account equity must be ≥ 250 USDT, otherwise the position will be liquidated (excluding fees and funding rates).
Liquidation Price FormulaLiquidation Price = 100,000 USDT × [1 − (1000 USDT − 500 USDT × 100 × 0.5%) ÷ (500 USDT × 100)]
100,000 USDT × [1 − (1000 USDT − 250 USDT) ÷ (500 USDT × 100)]
100,000 USDT × [1 − 750 USDT ÷ 50,000 USDT]
100,000 USDT × [1 − 0.015]
100,000 USDT × 0.985 = 98,500 USDT(excluding fees and funding rates)
Explanation:
Once the BTC price falls to 98500 USDT, all your funds in cross margin mode (1000 USDT) will be liquidated.
It is recommended to set stop-loss orders (for example, a stop-loss at 98600 USDT) to avoid passive liquidation that could wipe out your entire principal.
How to Avoid Forced Liquidation?
Control leverage wisely
High leverage can greatly increase risk. It is recommended to choose leverage levels that match your own risk tolerance.
Monitor your margin ratio
During trading, always pay close attention to the changes in your account’s margin ratio to avoid unexpected liquidation.
Add margin when needed
If your margin becomes insufficient, you can increase it by transferring in more assets or by reducing your position size.
Use stop-loss tools effectively
Set stop-loss orders in advance to help limit potential losses during market fluctuations and reduce the risk of forced liquidation.