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What is liquidation and bankruptcy price?
Liquidation happens when your margin falls below the maintenance margin, your position is force‑closed.
When liquidation is triggered, the system closes your position with the risk fund at a <b>bankruptcy price – the price where all of your margin (capital) is used up.</b> And because it's an internal trade with the risk fund, it does not appear on the candlestick (K‑line) chart.
For long positions, the bankruptcy price is usually below the current market price; for short positions, it is usually above the current market price.
Liquidation happens when your margin falls below the maintenance margin, your position is force‑closed.
When liquidation is triggered, the system closes your position with the risk fund at a <b>bankruptcy price – the price where all of your margin (capital) is used up.</b> And because it's an internal trade with the risk fund, it does not appear on the candlestick (K‑line) chart.
For long positions, the bankruptcy price is usually below the current market price; for short positions, it is usually above the current market price.
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What is maintenance margin?
It is the minimum balance you must keep in your perps account to avoid liquidation. <b>It's not a fee charged by the platform.</b>
If your account balance falls below the maintenance margin, the system will trigger forced liquidation.
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Where does my maintenance margin go after liquidation?
After liquidation:
- If the close is higher than the bankruptcy price, the leftovers go to the insurance fund to cover other users' losses.
- If the close is lower, the insurance fund pays the extra loss (so you will not lose more than your margin).
You can look at maintenance margin <b>as a protection mechanism, not platform profit</b>.
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Why is my actual loss bigger than the loss I saw?
Put simply, this happens because different prices are used to calculate PnL.
While your position is open, the unrealized PnL is calculated using the mark price (since no real trade has happened yet), so it's only a reference.
When the position is actually closed, PnL is calculated using the real-time price, which can differ from the mark price when the market is volatile.
When liquidation is triggered, the system closes your position at the bankruptcy price. The real-time execution price may be worse than the mark price, so your actual loss can be larger than the unrealized loss you saw before.