Liquidation (forced close) is one of the most important risk control mechanisms in futures trading. Understanding what triggers liquidation, how the liquidation price works, and how to avoid it is essential for every trader.

What is liquidation?

If the market moves against your position and your margin ratio reaches 100%, your position will be closed to prevent losses from exceeding your margin balance.

How is the liquidation price calculated?

Liquidation is triggered strictly based on a mathematical formula:
Margin ratio = maintenance margin ÷ margin balance

Maintenance margin = mark price × contract value × lots × maintenance margin rate (MMR)
 

When the margin ratio reaches or exceeds 100%, open orders may be canceled automatically, and the position may be partially or fully closed.
 

Note: WEEX uses a tiered MMR system. The larger your position size, the higher the required maintenance margin. With the same account balance, your margin ratio can reach 100% much faster, so larger positions carry higher liquidation risk.

What affects your liquidation price?

Why does liquidation sometimes feel "sudden"?

Sharp market moves / long wicks

• Prices can swing violently within seconds
• Your liquidation price may be hit instantly
• Not enough time to react

Ongoing funding fee deductions

• Funding fees are charged every settlement period
• Holding positions long term gradually reduces your margin
• The liquidation price will move closer without notice

Cross margin impact

• Losses from other positions can reduce your overall margin
• Lower account margin increases liquidation risk
• The liquidation price may move closer unexpectedly

Small price moves under high leverage

• With 20× leverage, a 5% move may trigger liquidation
• With 50× leverage, even a 2% move can be dangerous
• Higher leverage will bring the liquidation price much closer

How to reduce liquidation risk?

1. Use lower leverage (below 5×): Keep the liquidation price further from the entry price to give you more of a buffer against market volatility.
2. Set stop-loss orders: Close positions before liquidation is triggered to preserve part of your margin.
3. Add isolated margin: Add margin from the position page to move your liquidation price further away.
4. Enable est. liquidation price on the chart: Monitor the distance between the current price and your liquidation price in real time.
5. Check funding fees regularly: Long-term positions may gradually lose margin due to ongoing funding fee deductions.

⚠️ Liquidation follows clear rules and calculations—it's not triggered randomly. Understanding how it works and managing risk properly are essential for long-term futures trading.

Risk disclaimer: Futures trading involves high risk and may result in the loss of your entire principal. This content is for educational purposes only and doesn't constitute investment advice. Trade responsibly and make decisions based on your own risk tolerance after fully understanding the risks involved.