How liquidation actually works
What the number above means, and why it moves the way it does.
Why the exchange closes your position
Every leveraged position is backed by margin, not by the full notional value of the trade. The exchange requires you to keep a minimum amount of equity behind it — the maintenance margin — so that a loss never exceeds what you actually posted.
Once your equity falls to that minimum, the exchange force-closes the position rather than let it go further. This is not a penalty. It is the mechanism that keeps a loss from ever exceeding the margin you put up, for you and for the exchange.
The position does not have to reach zero for this to trigger. It triggers well before that, at the maintenance margin level, which is why the liquidation price sits before the bankruptcy price rather than at it — there needs to be enough equity left to actually cover closing the position.
Why leverage moves the liquidation price
The 1/leverage term in the formula is the intuitive part: it is how far the price has to move against you before your margin is gone. At 10x, that is a 10% move before fees and maintenance margin, so the real number comes out closer to 9.6%. At 50x, the same logic gives roughly 1.6%.
Higher leverage does not change how much you can lose in dollar terms — that is always your margin. It changes how small a price move it takes to lose it. Doubling your leverage roughly halves the room the price has to move against you before that happens.
Why your number will not match the exchange exactly
Maintenance margin is not one flat rate. Exchanges tier it by position size, so a larger notional sits in a higher tier and gets liquidated sooner than this simplified math suggests. This calculator applies the actual Binance tier your position falls into rather than a flat rate, but a different exchange's tier ladder will still produce a slightly different number.
Cross margin changes the picture further, since it draws on your whole account balance rather than just this position's margin. And unrealized PnL on other open positions moves your account equity continuously. Treat this result as a planning estimate, not the exact price you will see on the exchange, and confirm on the venue itself before sizing up.