A liquidation price calculator is an essential tool for traders to determine critical price points like profit targets, stop-loss levels, and liquidation thresholds. This guide will walk you through its functionalities with practical examples.
Step-by-Step Guide to Margin Calculations
1. Calculating Required Margin, P&L, and P&L Ratio
Follow these steps to compute key metrics for margin trading:
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Access the Calculator:
- Click the %Calculator under the Buy (long) option.
- Navigate to the PnL tab in the pop-up window.
Select Trade Type:
- Choose Margin Buy or Margin Sell based on your position.
Set Margin Mode:
- Select either Isolated or Cross margin.
Input Details:
- Enter Leverage, Entry Price, Exit Price, and Amount.
Calculate:
- Click Calculate to view results.
Example Formulas:
- Margin = Face Value × Contracts / Open Price / Leverage
- P&L Ratio = P&L / Margin
2. Determining Exit Price
To find the exit price for a desired P&L percentage:
Switch to Exit Price Tab:
- Within the same calculator, select the Exit Price section.
Repeat Trade Setup:
- Specify Margin Buy/Sell and Margin Mode.
Enter Variables:
- Provide Leverage, Entry Price, and PnL%.
Generate Result:
- Click Calculate for the exit price.
Example:
Exit Price = Entry Price × (1 + PnL%)
3. Estimating Liquidation Price
Calculate when your position might liquidate:
Input Position Details:
- Fill in Entry Price, Amount, and Additional Margin.
Compute:
- Use the calculator to derive the estimated liquidation price.
Formula:
Liquidation Price = (Maintenance Margin Ratio + 1 - Fee Rate) / (1 / Average Open Price / Leverage + 1 / Average Open Price + Added Margin / Face Value / Contracts)
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FAQs
Q1: Why is the liquidation price higher than my stop-loss?
A1: Liquidation accounts for leverage and maintenance margin, while stop-loss is manually set.
Q2: Can I adjust my liquidation price after opening a trade?
A2: Yes, by adding more margin or reducing position size.
Q3: How does leverage affect my liquidation risk?
A3: Higher leverage increases sensitivity to price swings, raising liquidation risk.
Q4: Is the liquidation price the same for all exchanges?
A4: No, formulas vary by platform. Always check exchange-specific calculators.
Pro Tip: Regularly recalculate liquidation prices if market volatility spikes.
For advanced tools, explore OKX’s margin trading features.
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