Understanding Liquidation Prices on Multi-Asset Margin

The word "liquidation" carries more weight than it should. For most retail traders new to leveraged perpetuals it sounds like the trade going to zero — account wiped, lights out. The reality is more boring and more manageable. Once you understand exactly when LMEX closes a losing position, sizing trades and setting stops gets a lot less stressful.

The formula is the same one used across most major perpetual venues. For a long:

Liquidation Price = Entry Price × (1 − (1 / Leverage) + Maintenance Margin Rate)

For a short, the sign on the bracket flips. Maintenance margin rate varies by asset — 0.5% on most BTC and ETH positions, higher on more volatile markets and on the equity perpetuals.

A concrete example does more work than the formula. Take a $10,000 long on BTC-PERP at $70,000 with 10× leverage. Initial margin is $1,000. Maintenance margin rate is 0.5%. Liquidation price comes out at $63,350 — a 9.5% adverse move before you are out. That is not a hair trigger. It is a meaningful drop, and most active traders can either manage out or eat the controlled loss before it gets there.

Now do the same trade with 50× leverage. Initial margin is $200. Liquidation price is $68,950 — 1.5% away. Bitcoin moves 1.5% in minutes during normal volatility. There is no time to manage that. You are either right immediately or you are out.

Most retail liquidations come down to that gap. People pick a leverage based on how much margin they want to put up, not on how much price movement they can stomach. The cure is not a clever stop loss. It is lower leverage. We say this a lot. We mean it every time.

Cross-Margin Changes the Picture

On LMEX, cross-margin is the default. Liquidation is not position-by-position. It is account-level. The metric is your margin ratio — total margin divided by total maintenance requirement across every open position.

When the ratio drops below 100%, the liquidation engine wakes up. It closes positions in order of largest unrealised loss first, freeing margin to support whatever is still alive. In most cases you do not lose the whole account, just the position bleeding fastest.

The trade-off, worth being honest about: cross-margin means your healthy positions back your sick ones. A profitable BTC long can carry an underwater TSLA short for longer than the TSLA short could survive on its own. That is good if the TSLA short eventually recovers. It is bad if you let the TSLA short bleed long enough to take down the whole account.

Isolated margin solves this by ring-fencing one position at a time. Useful for high-leverage trades you want capped at a known loss. The flip side: no shared safety net. Pick the mode that matches the trade, not the default mode for every trade.

Equity Perpetuals Liquidate Differently

AAPL-PERP, TSLA-PERP, NVDA-PERP and the rest of the equity perps have lower maximum leverage and higher maintenance margin requirements than crypto. Two reasons:

Liquidity is thinner during off-hours. Overnight and on weekends, the equity perp order book does not have the depth it has during the US session. The liquidation engine needs more buffer to close without nuking the book.

Earnings gap risk is real. A 5-10% move in the first minute after a release is not unusual. With high enough leverage, that is a guaranteed liquidation regardless of what you would have wanted to do.

Practically: expect a 10× leveraged AAPL-PERP position to liquidate around a 7-8% move, not the 9-10% you would see on BTC-PERP. The difference reflects the underlying risk, not anything punitive in the calculation.

Habits That Avoid Liquidation

The simplest cure is the boring one. Use less leverage. Most blown accounts trace back to a 50× position taken when 5× would have served the same view with ten times the margin buffer.

Beyond that, three habits worth building:

Set a stop loss above the liquidation price. A controlled exit at 5% loss on a 10× position closes the trade before the engine and avoids the small extra slippage that engine close-outs sometimes eat.

Watch the margin ratio. Take action when it is at 130-150%, not when it is at 100%. By the time it hits 100% the engine is already closing positions.

Hold a cash buffer. Keep a portion of the account in unused margin. Not glamorous and not optimised for return. Also the simplest insurance against the unexpected.

If you end up liquidated — and many active traders eventually do — you can keep trading with whatever is left. The engine only closes what is needed to bring you back above maintenance. The account is not done. The position is.

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