Liquidation is every margin trader's worst fear. Understanding when it triggers helps you prepare and avoid unnecessary losses.
Register on Binance for margin trading access. Download the Binance app to monitor your margin status.
Liquidation Trigger
When your margin ratio drops below a certain level, forced liquidation is triggered:
Margin ratio = Total assets / Total liabilities
When this ratio falls below the maintenance margin level, the system begins liquidating. The exact level varies by mode and trading pair.
Cross Margin Liquidation
All pairs share collateral. When your cross margin account's overall ratio falls below the maintenance threshold (typically around 1.1), positions are liquidated starting with the riskiest.
Isolated Margin Liquidation
Each pair is calculated independently. Only the pair whose ratio drops below the threshold gets liquidated, leaving others unaffected.
Advance Warnings
Yes, Binance sends margin call alerts via app notifications and email when your ratio approaches danger. But during volatile markets, the gap between warning and liquidation can be mere seconds.
How to Avoid Liquidation
Control leverage: 3x is far safer than 10x.
Maintain adequate margin: Don't borrow to the limit.
Set stop-losses: Auto-close before reaching danger zones.
Add margin promptly when alerted.
Diversify positions.
What Happens After Liquidation
Normally, your debt is cleared but your margin is essentially gone. In extreme cases, losses may exceed margin (negative balance), though Binance typically covers this through its insurance fund.
Checking Liquidation Price
Your margin account shows estimated liquidation prices for each position. Keep market prices well away from these levels.