Example: you long at $100 with 10x leverage and a 0.5% maintenance margin rate. Liquidation sits around 100 × (1 − 0.1 + 0.005) = $90.5 — about a 9.5% adverse move. At 50x, it only takes about 1.5%.
That's why high leverage gets wrecked by a single wick: the higher the leverage, the thinner your buffer. Maintenance margin rates vary by exchange and position size — always check the number your exchange shows.
How are PnL and ROI calculated?
For USDT-margined contracts:
PnL = position size in coins × (exit − entry) (reversed for shorts), where coins = notional ÷ entry.
ROI = PnL ÷ initial margin × 100%, where initial margin = notional ÷ leverage.
Common misconception: leverage multiplies your margin ROI, not the price move. At 10x, a 5% move means 50% on your margin — in both directions.
FAQ
How is the liquidation price calculated?
Isolated long: entry×(1−1/leverage+MMR); short: entry×(1+1/leverage−MMR). Higher leverage moves liquidation closer to entry. Actual values vary by exchange.
How do I calculate futures PnL?
PnL = coins × (exit − entry), reversed for shorts. ROI = PnL ÷ initial margin × 100%. Leverage multiplies margin ROI, not the price move.
Which has lower fees, Binance or OKX?
Similar for regular users: ~0.02% maker / 0.05% taker. Referral sign-ups rebate part of the fees. Check official pages for live rates.
How much leverage leads to liquidation?
Roughly: 10x → 10% adverse move, 50x → 2%, 100x → 1%. Start low and always set a stop loss.