When the Margin Rate is ≥ 100% (i.e., margin + unrealized PnL ≤ maintenance margin), the position triggers liquidation.
Margin Rate = Maintenance Margin / (Margin + unrealized PnL)
The sum of Margin and unrealized PnL is referred to as Margin Equity in the following text.
- Maintenance Margin: the minimum Margin Equity required to maintain the position (calculation formula).
- Unrealized PnL: the unrealized profit or loss of the position, which is the main driving force for liquidation and is calculated using the Mark Price.
- Mark Price: the fair price of the futures calculated using the futures market price and the spot price from major exchanges, which can avoid unnecessary liquidation caused by price manipulation.
In Isolated Margin mode, the position triggers liquidation when the Margin Equity falls to the maintenance margin level.
In Cross Margin mode, the position triggers liquidation when the futures account equity, after deducting the Isolated Margin Equity, falls to the maintenance margin level. Note that in Cross Margin mode, if a user holds both long and short positions, only the net position of both sides may trigger liquidation, while the locked portion is not affected.
Note that in Cross Margin mode, if a user holds both long and short positions of the same trading pair and does not meet the margin requirements, long and short positions are closed to offset with each other. If the margin requirements are met after this process, you will not enter the liquidation process.
You use 10 USDT with 100x leverage, opening a long position for 1 ETH when the ETHUSDT price is 1,000 U. The position value is 1,000 U. At this point (without considering fees):
- Margin = 10 USDT
- Maintenance margin = 5 USDT (calculation formula)
The position can withstand an unrealized loss of nearly 5 U, and the margin equity will be close to the maintenance margin (or the margin rate is close to 100%), which is about to trigger liquidation.
Using different margin and leverage to open the position, the amount of loss the position can withstand will vary. Note that if the position value remains the same, the maintenance margin will also remain the same:
- If using 10 USDT with 100x leverage, the maintenance margin is 5 U, and the position can withstand a loss of nearly 5 U at most.
- If using 100 USDT with 10x leverage, the maintenance margin is 5 U, and the position can withstand a loss of nearly 95 U at most.
- If using 200 USDT with 5x leverage, the maintenance margin is 5 U, and the position can withstand a loss of nearly 195 U at most.
As the Margin Rate approaches 100%, the position approaches liquidation. Due to the liquidation fee (higher than the trading fee), it is recommended that you close the position yourself before liquidation occurs.
Liquidation Fee = Value of the position closed by liquidation * Liquidation fee ratio of the trading pair
You hold a long position in BTCUSDT worth 20,000 USDT, and the Margin Rate is close to 100%, indicating that the position is about to be liquidated.
- If you voluntarily close the position at the market price before liquidation occurs, the trading fee ratio is up to 0.05%, and the trading fee is no more than 20,000 * 0.05% = 10 USDT.
- If you do not close the position voluntarily, and the position is completely liquidated, the liquidation fee ratio is 1.75%, and you will be charged 20,000 * 1.75% = 350 USDT.
It can be seen that the liquidation fee is much higher than the trading fee. It is recommended that you strictly control your position risk, close the position voluntarily, and try to avoid liquidation.
The fee ratios in the document may not be the latest data. Please refer to the APP for the latest data:
Liquidation fee ratio: Markets → Futures → BTCUSDT → Information → Leverage & Margin → Liquidation Fee Ratio.
Trading fee ratio: Account → Settings → Account → VIP level.
Liq. Price (Liquidation Price)
You can also refer to the Liq. Price to judge liquidation. The closer the Mark Price is to the Liq. Price, the closer the position is to being liquidated.
- In Isolated Margin mode, the Liq. Price of the position is not affected by other positions.
- In Cross Margin mode, all your positions share a margin, and the Liq. Price of any one position will change continuously with the unrealized PnL of other positions.
We will notify you of Margin Call (when the Margin Rate ≥ 80%) and Liquidation (when the Margin Rate ≥ 100%) through mobile app notifications, message center, email, and SMS. This notification serves as a risk warning, and we cannot guarantee timely delivery. In some cases during your use of the service (including due to network congestion or poor network environment), you may not receive or may experience delayed notification. Pionex reserves the right to send notifications, but has no obligation to do so.
Currently, only Cross Margin has notifications, and Isolated Margin notifications are coming soon.
If liquidation is triggered, Pionex uses partial liquidation to try to reduce the maintenance margin requirement, avoid liquidating all positions, and control user risk. The specific liquidation process is as follows:
Traders in the lowest margin tier:
Cancel all futures orders, and the liquidation engine takes over the position at the current Mark Price.
Traders in the second or higher margin tier:
- Cancel all futures orders.
- Submit several liquidation orders, with the total order value being the amount of positions needed to be closed to achieve “Margin – Estimated liquidation fee > Maintenance Margin”, thus preventing further liquidation.
- If the position still fails to meet the maintenance margin requirements, the liquidation engine takes over the position at the current Mark Price.
If your margin falls to a negative value after liquidation and you are unable to pay the profits to the counterparty, the Insurance Fund will fill the losses to ensure that the counterparty receives full profits and that your margin returns to zero.
The sources of the Insurance Fund are:
- The reserved provided by Pionex.
- All liquidation fees.
Disclaimer: The numbers in this article may not be the latest and are subject to change without notice.