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Calculate an ETH long in two separate stages: first size the position from the dollar amount you are willing to lose before your stop is hit, then estimate liquidation using your exchange’s maintenance-margin rules, mark price and margin mode. Leverage changes the margin you post; it does not increase the loss your stop-based risk budget can safely absorb.
1. Define the trade inputs before opening the order
Write down these values before using a calculator or order ticket:
- Entry price (E): the expected average fill price.
- Stop price (S): the price at which you plan to exit to cap the trade loss. For a long, S is below E.
- Risk budget (R): the maximum dollar loss allocated to this trade, including any amount you reserve for fees and slippage.
- Leverage (L): the leverage setting used to determine initial margin. It is not a substitute for risk sizing.
- Margin mode: isolated or cross. This changes how the exchange determines liquidation.
- Contract and account currency: ETHUSDT perpetuals, inverse contracts and spot-margin products can use different quantity units, deductions and formulas.
Use the exchange’s current contract specification, fee schedule and risk-limit table. A formula that is correct for one venue or contract may produce a wrong liquidation price on another.
2. Calculate ETH quantity from stop-loss risk
For a simple linear ETH long, the quantity before trading costs is:
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ETH quantity = risk budget ÷ (entry price − stop price)
In symbols, Q = R ÷ (E − S). The denominator is the dollar loss per ETH if the stop fills exactly at S. Because a real fill can include entry and exit fees, spread and slippage, treat this result as an upper bound, not an automatic order size.
Reserve money for fees and slippage
If the risk budget must cover costs, subtract a cost reserve before dividing, or reduce the resulting quantity by a conservative percentage:
Q = (R − F) ÷ (E − S)
Here, F is your estimated dollar reserve for entry fees, exit fees, funding or other contract charges and adverse execution. A stop order is not guaranteed to fill at its trigger price during a fast move. Your reserve should reflect the instrument’s liquidity and the order type you intend to use.
Worked arithmetic example
Suppose your risk budget is $200, ETH entry is $3,000 and your planned stop is $2,900:
- Loss per ETH at the stop: $3,000 − $2,900 = $100.
- Quantity before costs: $200 ÷ $100 = 2 ETH.
- Position notional: 2 × $3,000 = $6,000.
Two ETH is the mathematical maximum only when the stop fills at $2,900 and costs are ignored. If the $200 must also pay fees and slippage, use a smaller quantity after estimating those costs. This is an illustrative calculation, not a live quote or a recommendation.
Check quantity and order constraints
Round down to the contract’s permitted step size. Also check the minimum order quantity, minimum notional, maximum position limit and whether the contract expresses size in ETH, contracts or a currency value. Recalculate the actual dollar risk after rounding; rounding up can exceed your budget.
3. Convert quantity to notional and initial margin
Position notional is:
Position notional (N) = Q × E
For the example, N is $6,000. For a linear USDT-margined position, initial margin is approximately:
Initial margin ≈ N ÷ L
For example, 5× leverage on $6,000 of notional requires approximately $1,200 of initial margin before venue-specific fees and deductions. The exact amount can differ because exchanges apply contract rules, rounding and sometimes an opening-fee component. Bybit’s official explanation states, “Initial Margin = Position Value / Leverage.”
Initial margin answers how much collateral is committed when the position opens. It does not tell you how far the liquidation price is from entry. A 10× position can still be sized to the same stop-based dollar risk as a 3× position if the ETH quantity is unchanged; the higher leverage mainly reduces the margin allocated to that notional and leaves less cushion before liquidation.
4. Identify the maintenance-margin tier
Liquidation depends on maintenance margin, not just the leverage number shown in the order form. Exchanges commonly use risk tiers: as your position notional increases, the maintenance rate, a fixed deduction, or both can change.
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Binance defines the tier calculation as:
Maintenance Margin = Position Notional × Maintenance Margin Rate for the notional level − Maintenance Amount for that level.
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Use the tier that applies to the resulting notional, not the tier from a smaller trial order. If adding to a position crosses a tier boundary, the maintenance requirement and liquidation estimate must be recalculated. Funding, close fees and contract-specific deductions can also affect the displayed figure.
Why a larger order can liquidate sooner than a simple leverage formula suggests
A shortcut such as “liquidation is roughly entry minus entry divided by leverage” ignores maintenance tiers, deductions, fees and the exchange’s mark-price convention. It becomes less reliable as notional grows or when the position is near a tier boundary. The exchange calculator or preview is the authoritative check for the current order.
5. Estimate an isolated-margin liquidation price
In isolated margin, only the margin assigned to that position is normally exposed to its liquidation process. For a simplified long, Bybit publishes this relationship:
Liquidation Price (Long) = Entry Price − [(Initial Margin − Maintenance Margin) ÷ Position Size] − (Extra Margin Added ÷ Position Size).
Insert the maintenance margin for the current notional tier and any venue-specified fees or contract deductions exactly where the exchange documentation requires them. “Position size” must use the contract’s native quantity unit. Do not mix an ETH quantity with a contract-value denominator.
Illustrative isolated calculation structure
Using the $6,000 notional example, you would:
- Set E = $3,000, Q = 2 ETH and select the intended leverage.
- Compute or retrieve the venue’s initial margin for that position.
- Look up the maintenance rate and deduction for the $6,000 tier.
- Compute the maintenance margin using that tier’s rule.
- Apply the venue’s long-position equation, including any required close-fee or other deduction.
- Compare the result with the liquidation price shown in the order interface while the mark price is current.
Because the maintenance tier, fee schedule and account settings are not specified in this example, it cannot produce a valid universal liquidation number. Substituting a Binance result into a Bybit or Deribit position is unsafe.
How isolated margin changes the result
Adding extra isolated margin generally moves liquidation farther below the entry price for a long. Lower leverage also generally increases the margin cushion. The exact distance still depends on the maintenance tier, fees, deductions and whether the exchange uses a different liquidation convention for the contract.
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Cross margin uses account-level collateral rather than treating the position’s assigned margin as the only available buffer. Bybit says its displayed liquidation price is calculated dynamically from current account equity, maintenance-margin requirements and open positions.
A cross-margin estimate therefore needs all of the following:
- Available and wallet balance that the venue permits as collateral.
- Unrealized profit or loss on the ETH position and every other open position.
- Maintenance requirements for every open position and open order that reserves margin.
- Funding, trading fees and any venue-specific deductions.
- The mark price used by the venue at that moment.
If another position loses money, your ETH liquidation price can move closer even when ETH itself has not moved. If another position gains money or you add collateral, it can move farther away. Recalculate after fills, partial closes, transfers, funding payments and material price changes; a cross-margin liquidation price is not a fixed stop.
7. Mark price, last price and the liquidation trigger
Liquidation is normally triggered by the venue’s mark price and maintenance test, not simply by the last traded price on the chart. Bybit describes the trigger as occurring when unrealized losses reduce position margin below the required maintenance margin level.
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- A candle can touch your displayed liquidation level on a last-price chart without liquidating if the mark price does not reach the trigger.
- Conversely, a mark-price move can trigger liquidation while the last trade on another feed appears different.
- Your stop should be placed far enough from liquidation to allow execution and should be monitored against the price reference used by the stop order.
Before submitting, identify the venue’s mark-price index, update behavior and liquidation notification. Keep a safety gap between the planned stop and the estimated liquidation price; a stop intended to limit risk should execute first.
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8. Venue differences you must verify
The following comparison shows which inputs can differ. It is a checklist for verification, not a single cross-venue formula.
| Item | What to verify | Why it changes the result |
|---|---|---|
| Margin mode | Isolated or cross; whether extra margin can be added | Isolated uses position-level collateral; cross uses account equity and other positions. |
| Mark-price methodology | Index sources, premium adjustment and trigger reference | Liquidation is based on the venue’s mark-price process, not necessarily the last trade. |
| Maintenance tiers | Notional bands, rates and fixed deductions | The applicable requirement can change when size crosses a tier. |
| Fees and funding | Opening, closing, funding and liquidation-fee treatment | Charges reduce available equity and may be included in the displayed liquidation estimate. |
| Maximum leverage | Leverage allowed for the ETH contract and its current notional tier | Maximum leverage can decline as position size increases; the setting is not necessarily constant. |
| Contract unit | ETH, contracts, USD value or inverse denomination | Using the wrong unit in the equation gives the wrong margin and price distance. |
| Displayed liquidation price | Whether estimated close fees and other deductions are included | Two venues can show different prices for otherwise similar positions. |
Deribit’s size-dependent standard-margin model
Deribit documents a standard-margin model in which IM = 1 ÷ L(N) and MM = 2/3 × IM. The available leverage L(N) varies with position size and instrument tier. Its ETHUSDT perpetual contract sheet lists size-dependent initial- and maintenance-margin components. You therefore need the current ETHUSDT tier and contract sheet values rather than assuming a fixed percentage for every size.
9. A complete pre-trade procedure
- Choose the invalidation level. Set the stop from your trade thesis, then confirm it is below entry for a long and not unreasonably close to normal ETH volatility.
- Set the dollar risk. Decide the maximum loss for this position. Include a separate reserve if fees, funding and slippage must fit inside that amount.
- Calculate quantity. Use Q = (R − F) ÷ (E − S), then round down to the permitted quantity step.
- Recheck actual stop risk. Multiply the rounded quantity by E − S and add conservative costs. Reject the order if the total exceeds R.
- Calculate notional. Multiply the rounded quantity by the expected entry price and check minimum, maximum and tier limits.
- Select margin mode and leverage. Decide isolated or cross before estimating liquidation. Treat leverage as a collateral setting, not a risk target.
- Retrieve current maintenance inputs. Read the ETH contract’s maintenance rate, deduction, tier, fee treatment and mark-price rules.
- Estimate liquidation. Apply the venue’s long formula with the correct contract units and any extra isolated margin.
- Validate in the order interface. Enter the same quantity, leverage and margin mode and compare the platform’s displayed liquidation price with your estimate.
- Confirm the safety gap. Ensure the planned stop is reached before liquidation under a plausible adverse move, and leave room for slippage and mark-price differences.
- Recalculate after changes. Repeat the check after scaling in, changing leverage, adding collateral, moving the stop, transferring funds or opening another position.
10. Common calculation errors and fixes
Using leverage to choose size
Error: Starting with “I want 10×” and buying the largest position the margin allows.
Fix: Determine Q from R and the stop distance first. Choose leverage only after the notional is known.
Confusing initial margin with maximum loss
Error: Treating the posted margin as the amount at risk.
Fix: Risk is determined by quantity, entry, exit price and execution costs. Initial margin is collateral; it is not a stop-loss budget.
Ignoring tier changes
Error: Applying the smallest maintenance rate to a larger position.
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Fix: Identify the tier from the final notional after every scale-in and use its rate and deduction.
Using a last-price chart for liquidation
Error: Assuming the last traded price is the trigger.
Fix: Check the venue’s mark price and index methodology, and compare the live mark price with the displayed liquidation level.
Applying another exchange’s formula
Error: Copying a liquidation number or formula from a different venue.
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Forgetting cross-margin positions
Error: Estimating cross liquidation from the ETH position alone.
Fix: Include wallet equity, every open position, reserved margin and unrealized PnL, then recalculate whenever they change.
Rounding up
Error: Rounding the calculated quantity to the next allowed increment.
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Fix: Round down and recompute the actual risk; a small increment can push a minimum-risk plan over budget.
11. What to record before clicking Buy or Open Long
- Entry assumption and the actual average fill after execution.
- Stop trigger, order type and whether the stop references mark, last or index price.
- Risk budget, fee/slippage reserve and resulting ETH quantity.
- Notional, leverage and margin mode.
- Maintenance tier, rate, deduction and the time you checked them.
- Estimated liquidation price and the platform’s displayed liquidation price.
- Available account equity and other positions if using cross margin.
- The conditions that require a new calculation, such as scaling in or moving funds.
This record makes it possible to distinguish a sizing mistake from a change in market price, tier, fees or account equity.
12. The practical decision rule
Open the trade only when the quantity derived from your stop fits the contract constraints, the total planned loss including costs fits your risk budget, and the exchange’s current liquidation estimate is comfortably beyond the stop. If any input is unknown—especially the maintenance tier, mark-price convention or cross-margin equity—do not treat a hand calculation as precise. Use the selected venue’s live calculator and reduce size until the assumptions remain valid.
Frequently Asked Questions
Can I use the same ETH liquidation formula on every exchange?
No. Maintenance tiers, fixed deductions, fee treatment, contract units, mark-price rules and account modes differ. Use the formula and calculator for the exact ETH contract and venue.
Why is my liquidation price different after I add to an ETH long?
Adding size can change the maintenance-margin tier and the weighted entry price. It also changes notional and required margin, so the liquidation calculation must be rerun.
Does lower leverage guarantee that my stop-loss risk is lower?
No. Stop-loss risk comes from quantity, entry, stop distance and execution costs. Lower leverage generally provides more margin cushion, but it does not reduce risk if you keep the same quantity and stop.
What happens to a cross-margin liquidation price when another position loses money?
The other position’s unrealized loss reduces account equity available to support the ETH long, so the ETH liquidation price can move closer. Recalculate using all positions and current equity.
Should my stop be placed at the liquidation price?
No. A stop should be reached before liquidation, with a buffer for slippage and differences between last price and the venue’s mark price.
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