Understanding how liquidation works is crucial for any trader engaging in futures or leveraged trading. On OKX, one of the world’s leading cryptocurrency exchanges, the liquidation mechanism is designed to protect both users and market stability. This article explains how OKX calculates liquidation price, outlines the conditions for liquidation, and dives into key concepts like margin ratio, tiered liquidation, and practical steps to estimate your own liquidation point using built-in tools.
Whether you're trading USDT-margined perpetual contracts or managing multiple positions under a unified account, knowing when and why a position might be liquidated can help you manage risk more effectively.
Understanding Margin Ratio: The Core of Liquidation
The margin ratio is the primary metric used by OKX to assess the health of your trading position. When this ratio drops to or below 100%, your position becomes subject to partial deleveraging or full liquidation.
But margin ratio isn't calculated the same way across all account modes. OKX uses different formulas depending on whether you're using single-currency margin, multi-currency margin, or isolated margin.
1. Single-Currency Margin Mode (Cross Margin)
In cross-margin mode, your entire balance in a specific currency supports all open positions in that currency.
Formula:
Margin Ratio = (Currency Balance + PnL - Sell Order Amount - Option Buy Requirement - Isolated Margin Requirement - Total Fees) / (Maintenance Margin + Liquidation Fee)- Maintenance Margin: Sum of maintenance requirements for leveraged loans, delivery contracts, perpetuals, and options — including active limit orders.
Liquidation Fee: Estimated taker fee based on current position value and user fee tier:
- Leveraged loan fee = Position value × taker fee rate
- Futures/perpetual fee = Position value × taker fee rate
- Options fee = Position value × taker fee rate
👉 Discover how to calculate your real-time margin ratio with precision using advanced tools.
This comprehensive approach ensures that pending orders don’t suddenly push an account into high risk upon execution.
2. Multi-Currency Margin Mode (Cross Margin)
Here, multiple currencies contribute to overall collateral. The system evaluates total risk exposure across supported assets.
Formula:
Margin Ratio = Effective Collateral / (Maintenance Margin + Deleveraging Fee)Both maintenance margin and deleveraging fee are calculated based on:
- Current position size
- Open order volume (including limit entries)
This method enhances capital efficiency while maintaining strict risk control.
3. Isolated Margin (Single or Multi-Currency)
Isolated margin isolates risk per position. Two separate formulas apply depending on direction:
Long Position:
Margin Ratio = [Position Asset - (Liability + Interest) / Mark Price] / (Maintenance Margin + Fee)Short Position:
Margin Ratio = [Position Asset - |Liability + Interest| × Mark Price] / (Maintenance Margin + Fee)These calculations ensure accurate risk assessment regardless of market direction.
What Triggers Liquidation on OKX?
Liquidation occurs when your margin ratio falls to or below 100%. However, OKX does not immediately close your entire position. Instead, it employs a tiered liquidation mechanism — a sophisticated risk management system designed to minimize market impact.
Tiered Liquidation Explained
Rather than wiping out large positions all at once — which could cause slippage and volatility — OKX first triggers automatic partial deleveraging:
- System reduces position size incrementally.
- After each reduction, it re-evaluates the new margin ratio.
- If the updated ratio still fails to meet the required threshold for its tier, another reduction follows.
This loop continues until either:
- The position regains sufficient margin, or
- The entire position is closed.
This gradual process protects traders from sudden total losses and helps maintain orderly markets during sharp price swings.
How to Calculate Your Liquidation Price
While the backend math may seem complex, OKX provides user-friendly tools to estimate your liquidation price — essential for setting stop-losses and managing leverage wisely.
Using the Mobile App
- Go to the [Trade] page.
- Tap the trading pair (e.g., BTC/USDT) at the top left.
Switch trading mode:
- Select Perpetual
- Choose USDT Contracts
- Pick your contract (e.g., BTCUSDT Perpetual)
- Tap the calculator icon in the top right.
Choose:
- Contract type (BTCUSDT Perpetual)
- Position mode (Cross Margin or Isolated)
- Direction (Long or Short)
Enter:
- Leverage
- Entry price
- Quantity
- Available margin
- Tap Calculate — your estimated liquidation price appears instantly.
Using the Web Platform
- Click [Trade] in the top-left corner of the OKX homepage.
- Navigate to [Derivatives] > [Perpetual].
- Select your desired market (e.g., BTCUSDT-SWAP).
- Find the calculator icon at the bottom-left of the trading interface.
Choose:
- Trading type (BTCUSDT Perpetual)
- Side (Long/Short)
- Margin mode (Isolated/Cross)
- Leverage level
Input:
- Entry price
- Position amount
- Additional margin (if applicable)
- Click Calculate to view your liquidation threshold.
⚠️ Note: In unified accounts with multiple concurrent positions, the displayed estimated liquidation price may differ from actual execution due to shared margin dynamics and fluctuating PnL.
Frequently Asked Questions (FAQ)
Q1: What happens when my position gets liquidated?
When your margin ratio reaches 100%, OKX initiates a tiered deleveraging process. It starts by reducing part of your position. If risk remains elevated, further reductions occur until the account stabilizes or is fully closed.
Q2: Why is my estimated liquidation price different from the actual one?
Estimates assume static conditions. In reality, factors like funding fees, mark price movement, and PnL from other positions (in cross-margin mode) can shift the true liquidation point dynamically.
Q3: Can I avoid liquidation entirely?
Yes — by maintaining sufficient margin, using lower leverage, setting manual stop-losses, or adding more collateral before prices move against you.
Q4: Does OKX notify me before liquidation?
Yes. OKX sends real-time alerts via app notifications and emails when your margin level approaches dangerous thresholds, giving you time to act.
Q5: Is tiered liquidation better than full liquidation?
Absolutely. Tiered liquidation reduces market shock and gives struggling positions a chance to recover after partial closure — a major advantage over older "all-or-nothing" models.
Q6: How does mark price affect liquidation?
OKX uses mark price, not last traded price, to determine liquidations. This prevents manipulation and ensures fairness during volatile periods.
Key Takeaways for Risk-Aware Traders
To trade safely on OKX:
- Monitor your margin ratio constantly.
- Use the built-in liquidation calculator before opening any leveraged position.
- Prefer cross-margin for diversified support, or isolated margin for precise risk control.
- Understand that multi-position accounts have dynamic risk profiles — don’t rely solely on auto-calculated estimates.
- Always leave a buffer between current price and estimated liquidation level.
👉 Maximize your trading edge with real-time analytics and advanced risk modeling tools.
By mastering these mechanisms, you gain greater control over your trades and reduce the likelihood of unexpected losses — empowering smarter, more confident decision-making in fast-moving crypto markets.
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