Perpetual Contract Liquidation Rules
Please read carefully the trigger conditions, execution process, and related rules for the Perpetual Contract Liquidation mechanism before opening a contract account.
I. Liquidation Trigger Conditions
Liquidation is triggered when the Maintenance Margin Ratio of a position (or cross margin account) falls to ≤100%.
Isolated Margin Mode
Each isolated position is calculated independently. When the Maintenance Margin Ratio of a single position reaches 100%, the system triggers liquidation for that position only, without affecting other positions or account balances.
Cross Margin Mode
Calculated based on the total equity of the entire contract account. When the cross margin equity falls to the sum of Maintenance Margin for all cross positions plus Estimated Closing Fees, the Maintenance Margin Ratio reaches 100% and liquidation is triggered.
II. Liquidation Price
Before triggering liquidation, the system pre-calculates and displays the estimated liquidation price to the user.
Isolated Long Position Liquidation Price
Liquidation Price = (Maintenance Margin − Position Margin + Average Entry Price × Qty × Contract Value) ÷ [Qty × Contract Value × (1 − Taker Fee Rate)]
Isolated Short Position Liquidation Price
Liquidation Price = (Average Entry Price × Qty × Contract Value + Position Margin − Maintenance Margin) ÷ [Qty × Contract Value × (1 + Taker Fee Rate)]
The liquidation price is dynamically calculated based on the average entry price, current margin, and maintenance margin, and changes when margin is added or positions are partially closed.
III. Liquidation Execution Process
- The system continuously monitors the Maintenance Margin Ratio of each position/account using the mark price.
- When the Maintenance Margin Ratio reaches 100%, the system immediately initiates a liquidation order.
- The liquidation order is placed as a limit order at the bankruptcy price (the theoretical price at which margin reaches zero), seeking execution at a price equal to or better than the bankruptcy price.
- The actual execution price and time may be affected by market liquidity and price volatility. The final trade record shall prevail.
IV. Bankruptcy Price
Long Position
Bankruptcy Price = (Average Entry Price × Qty × Contract Value − Position Margin) ÷ [Qty × Contract Value × (1 − Taker Fee Rate)]
|
Example:
Long Direction (Liquidation triggered by price decline)
Entry Parameters: Gold at 3,300 USD, buy long 1 lot, 10x leverage, Taker Fee Rate 0.05%, Maintenance Margin Rate 0.5%
➡️Step 1: Initial Margin Initial Margin = 3,300 × (1/10 + 0.05%) = 331.65 USD
➡️Step 2: Liquidation Threshold Maintenance Margin = 3,300 × 0.5% = 16.50 USD, plus Estimated Closing Fee 1.49 USD, total minimum requirement = 17.99 USD
➡️Step 3: Price decline erodes margin Price drops from 3,300 to 2,986.34 USD, cumulative unrealized loss 313.66 USD, remaining margin falls to 17.99 USD, hitting the threshold — the system immediately initiates a liquidation order.
➡️Step 4: Liquidation Order Price The system places a limit order at the bankruptcy price of 2,969.84 USD, seeking execution at a price better than the bankruptcy price.
Bankruptcy Price = (Average Entry Price × Qty × Contract Value + Position Margin) ÷ [Qty × Contract Value × (1 + Taker Fee Rate)]
|
V. How to Avoid Liquidation
- Maintain sufficient margin balance and add margin (top up) promptly when needed.
- Set appropriate stop-loss orders to proactively close positions before losses escalate.
- Use lower leverage to increase the distance between the liquidation price and the current price.
- Monitor the Funding Rate to prevent holding costs from eroding margin.
|
Example:
Short Direction (Liquidation triggered by price increase)
Entry Parameters: Gold at 3,300 USD, sell short 1 lot, 10x leverage, Taker Fee Rate 0.05%, Maintenance Margin Rate 0.5%
➡️Step 1: Initial Margin Initial Margin = 3,300 × [(1/10) × (1 + 0.05%) + 0.05% × (1 − 0.5%)] = 331.81 USD
➡️Step 2: Liquidation Threshold Maintenance Margin = 3,300 × 0.5% = 16.50 USD, plus Estimated Closing Fee 1.81 USD, total minimum requirement = 18.31 USD
➡️Step 3: Price increase erodes margin Price rises from 3,300 to 3,613.50 USD, cumulative unrealized loss 313.50 USD, remaining margin falls to 18.31 USD, hitting the threshold — the system immediately initiates a liquidation order.
➡️Step 4: Liquidation Order Price The system places a limit order at the bankruptcy price of 3,630.00 USD, seeking execution at a price better than the bankruptcy price.
|
*If you have any questions about the liquidation mechanism, please submit the Vantage trade investigation form directly, the dedicated trading team will provide further assistance to you.