How to calculate the liquidation price?
The formula for calculating the liquidation price for a margin trade using currency "i" is as follows:
- "i" represents the currency "i";
- "Ai" represents the total amount of "i" assets;
- "Li" represents the borrowed amount of "i" asset;
- "Ri" represents the amount of interest payable on "i" asset;
- "Pi" represents the index price of the "i" asset/BTC (or USDT) pair;
- "li" represents the liquidation price for the "i" asset.
Liquidation will be triggered when the risk ratio reaches the liquidation risk ratio.
Risk Ratio = Total Assets / (Total Amount Borrowed + Interest Payable).
Using the "i" currency as an example:
Therefore, the liquidation reference price for "i" currency is:
Ratio of the Index Price to the Liquidation Reference Price = (Liquidation Price - Index Price) / Index Price.
Where can I view the liquidation price of my positions?
If you’re using the Binance website:
1. Log in to your Binance account and go to [Trade] - [Margin]. Click [Cross] or [Isolated] to switch to Cross or Isolated Margin mode.
2. Click [Positions] to view information related to your Margin positions, including the liquidation price.
3. You may also view liquidation price information from your wallet. Mouse over the wallet icon and click [Margin] - [Positions].
If you’re using the Binance app:
1. Log in to your Binance app and tap [Trade] - [Margin]. Select [Cross] or [Isolated] to switch to the desired mode, then scroll down and go to the [Positions] tab.
2. You may also view liquidation price information in [Wallets] - [Margin]. Tap on a token and choose [Position (USDT)] to view.
Binance Margin calculator:
You may also use the Binance Margin Calculator or the backward calculation method to get an estimated liquidation price.
For example:
The Cross Margin liquidation ratio is at 1.1
Asset / Liability = 1.1
User A has 10,000 USDT as collateral and borrowed 20,000 USDT to purchase 1 BTC at $30,000. Now, their margin position is 1 BTC (asset) and 20,000 USDT (debt).
Liquidation price (USDT) :
= Asset Price / 20,000 = 1.1
= 1.1 * 20,000
= 22,000
The estimated liquidation price for BTC in this scenario is $22,000.
Why can't I view the liquidation price for my positions?
In some cases, the liquidation price may be displayed as “/” or “--” for a particular position. This is because the liquidation price for each token is calculated with an assumption that the asset value of other positions remain the same.
When the asset value of certain positions may not cause liquidation (even if those positions become $0 in value), the liquidation price won’t be displayed. For example:
User B has 10,000 USDT as collateral and he borrowed 20,000 USDT to purchase 1 BTC at $29,000 and 1 ETH at $1,000. Now his margin position is 1 BTC and 1 ETH (asset) and 20,000 USDT (debt).
Liquidation price of BTC in USDT (assuming the ETH price remains constant at $1,000):
= (BTC Price * 1 BTC + ETH Price * 1 ETH) / $20,000 = 1.1
= (BTC Price * 1 BTC + $1,000) / $20,000 = 1.1
= BTC Liquidation Price = 1.1 * 20,000 - 1000
= BTC Liquidation Price = $21,000
Liquidation Price of ETH in USDT (assuming the BTC price remains constant at $29,000):
= (BTC Price * 1 BTC + ETH Price * 1 ETH) / $20,000 = 1.1
= ($29,000 + ETH Price * 1 ETH) / $20,000 = 1.1
= ETH Liquidation Price = 1.1 * 20,000 - 29,000
= ETH Liquidation Price = -$7,000 < 0
In the above example, even if the value of the ETH position goes to $0, there’s still $29,000 worth of BTC against $20,000 USDT debt. Therefore, no liquidation will occur. In this instance, the liquidation price for ETH will be displayed as “/” or “--”.