Bankruptcy Price refers to the price at which a trader’s margin balance becomes zero and the position can no longer cover its losses.
When liquidation happens, the liquidation engine will take over the position and close it at the takeover price (bankruptcy price). Liquidations are handled by the liquidation engine and do not go through the matching engine, hence the bankruptcy price may not appear on the candlestick chart.
Once a user's position is taken over by the liquidation engine at the bankruptcy price, if it can be executed at a price better than the bankruptcy price, any remaining margin will be added to the insurance fund.
If the position cannot be executed at a price better than the bankruptcy price, the resulting deficit will be covered by the insurance fund. Finally, if the insurance fund is insufficient to cover the loss, the position will be passed on to the auto-deleveraging (ADL) system.
The Bankruptcy Price calculation depends on the margin mode used.
Bankruptcy Price under Isolated Margin Mode
Bankruptcy Price under Cross Margin Mode
Bankruptcy Price under Portfolio Margin Mode
Bankruptcy Price under Isolated Margin Mode
Under Isolated Margin Mode, only the margin allocated to that position is at risk. Other assets in your account will not be used to support the position.
USDT & USDC Contracts
In USDT contracts, the margin value is stable. The calculation uses the Initial Margin Rate (IMR), which is the inverse of leverage.
For Buy/Long:
Bankruptcy Price= Entry Price × (1 − Initial Margin Rate)
For Sell/Short:
Bankruptcy Price= Entry Price × (1 + Initial Margin Rate)
Initial Margin Rate (IMR) = 1 ÷ Leverage
Example:
Trader A holds a BTCUSDT Long position with an entry price at 60,000 USDT, leverage is 50x.
Bankruptcy Price= 60,000 × [1 − (1 ÷ 50)] = 58,800 USDT
Inverse Contracts
Inverse contracts use the underlying coin (e.g., BTC) as collateral. Since the collateral's value fluctuates with the market, the math is non-linear and uses Leverage directly.
For Buy/Long:
Bankruptcy Price = Entry Price x [Leverage ÷ (leverage + 1)]
For Sell/Short:
Bankruptcy Price = Entry Price x [Leverage ÷ (leverage − 1)]
Example:
Trader B holds an ETHUSD short position with an entry price at 2,200 USD, leverage is 30x.
Bankruptcy Price = 2,200 × [30 ÷ (30 − 1)] = 2,275.86 USD
Note:
— Bankruptcy Price is also used to calculate the fee to close position, reflected in the Order Cost.
— For long positions, the bankruptcy price will be rounded up to the nearest 0.5 decimal place or integer while for short positions, the bankruptcy price will be rounded down to the nearest 0.5 decimal place or integer.
For more details, please refer to the Trading Rules: Liquidation Process (Unified Trading Account).
Bankruptcy Price under Cross Margin Mode
Under Cross Margin Mode, all available margin in your derivatives account is shared across positions. This means your entire account balance may be used to absorb losses and help prevent liquidation.
Unlike Isolated Margin Mode, the Bankruptcy Price is not calculated based on a single position in Cross Margin Mode. Instead, it is determined by your overall account risk (Maintenance Margin Rate) at the time of liquidation.
When the system evaluates your account risk, it takes into account multiple factors, including your maintenance margin requirements across different products, such as futures positions, options positions, and any margin impact from spot trading activities It also considers your unrealized P&L, as well as potential losses from open orders to calculate the Approximate Available Margin.
As these factors are constantly changing with market conditions, your account risk is recalculated in real time. This means the Bankruptcy Price is not fixed and cannot be precisely determined in advance.
For reference, the Bankruptcy Price under Cross Margin Mode can be simplified as:
USDT & USDC Contracts
For Buy/Long:
Bankruptcy Price = (Entry Price x Position Size − Approximate Available Margin) ÷ [Position Size − (Position Size x Taker Fee Rate)]
For Sell/Short:
Bankruptcy Price = (Approximate Available Margin + Entry Price x Position Size) ÷ [Position Size + (Position Size x Taker Fee Rate)]
Inverse Contracts
For Buy/Long:
Bankruptcy Price = (1 + Taker Fee Rate) ÷ [ (1 ÷ Entry Price) + (Approximate Available Margin ÷ Position Size ) ]
For Sell/Short:
Bankruptcy Price = (1 − Taker Fee Rate) ÷ [ (1 ÷ Entry Price) − (Approximate Available Margin ÷ Position Size ) ]
Please Note that the above formulas do not reflect the full account-level risk calculation. The final result depends on your actual account state at the moment of liquidation. As a result, any displayed price should be considered for reference only.
For more details, please refer to the Trading Rules: Liquidation Process (Unified Trading Account).
Bankruptcy Price under Portfolio Margin Mode
Under Portfolio Margin Mode, similar to Cross Margin Mode, the system evaluates risk based on your overall portfolio exposure rather than individual positions. For more information on how margin is calculated in Portfolio Margin, please refer to Margin Calculations under Portfolio Margin.
This means your account risk is assessed based on the combination of all open positions, including both hedged and unhedged positions, together with your total account equity. As market conditions change, the system continuously recalculates your position value and equity to determine your portfolio risk.
As a result, the Bankruptcy Price is not fixed and will change dynamically based on your portfolio risk and account balance. Instead of relying on the margin of a single position, liquidation is triggered when your account overall portfolio risk (MMR) reaches the required threshold (100%).
Once this threshold is reached, your positions will be taken over by the liquidation engine, which will attempt to close them in the market.
For more details about the liquidation process, please refer to the Trading Rules: Liquidation Process (Unified Trading Account).