Leverage is the reason many traders open a futures account in the first place. At 10x, a deposit of 1,000 USDT controls a 10,000 USDT position, so a 5% move in your favor earns half your deposit instead of a twentieth of it.
The same arithmetic runs in reverse. A 5% move against that position costs half the deposit, and a drop of just under a tenth leaves too little margin to keep the trade open. At that point the exchange closes it for you. That forced close is liquidation, and in a fast market it reaches thousands of traders at once. On October 10, 2025, more than $19 billion of leveraged positions were liquidated across the crypto market within 24 hours, after a tariff announcement set off a chain of forced selling (source: CoinDesk).
Staying out of that number has less to do with the leverage setting than with how each position is sized. When your stop-loss sits well inside your liquidation price, the stop closes the trade at a loss you planned for, long before the exchange has to step in.
On BloFin futures, the order panel shows an estimated Liq. Price before you place an order, and liquidation runs on the mark price rather than the last trade. Once you know how that level is set, and what moves it closer, you can size every trade so it stays out of reach.
What are leverage and liquidation in crypto futures?
Leverage is the ratio between the value of your position, called its notional value, and the margin you put up to hold it. Deposit 1,000 USDT as margin and open a 10,000 USDT position, and you are using 10x leverage. Every 1% the price moves against you then costs 100 USDT, a tenth of your margin. Liquidation is the forced close that follows when losses have used up so much of that margin that it can no longer support the position.
Leverage changes how much margin a position needs. It does nothing to the market's volatility or to your odds of being right about direction, so the leverage number on its own says surprisingly little about risk. Two traders can both use 10x and carry very different exposure.
Trader | Margin | Position at 10x | Stop distance | Loss at the stop |
|---|---|---|---|---|
A | 10,000 USDT | 100,000 USDT | 2% | 2,000 USDT |
B | 1,000 USDT | 10,000 USDT | 2% | 200 USDT |
Lowering leverage only lowers risk if the position shrinks with it. Cut from 10x to 5x on the same 10,000 USDT position and you put up 2,000 USDT of margin instead of 1,000 USDT, but a 2% drop still costs 200 USDT. What sets your loss is the notional value and the distance to your stop, measured against the size of your account.
The coin matters as well. The same leverage on a large, heavily traded coin carries less risk than on a small token that can swing 15% in an afternoon, because the token reaches your stop, or your liquidation price, far more easily. BloFin's guide to volatility in cryptocurrency shows how to gauge how much a coin usually moves.
How liquidation works on BloFin
BloFin liquidates a futures position when the mark price reaches the position's liquidation price, the point where its margin can no longer cover the loss. The liquidation engine then takes the position over and closes it, and it may first cancel open orders linked to that position, including its take-profit and stop-loss (TP/SL) orders. Any funds left after settlement and fees are returned to your account, and a liquidated position cannot be restored (source: BloFin Help Center, Liquidation FAQ).
The engine works from a second level, the bankruptcy price, which is where the position's margin would be fully used up. Closing the position against that reference helps keep a loss from running past the equity in the account and reduces the risk of a negative balance (source: BloFin Help Center, Liquidation FAQ). For you, that means liquidation is a backstop that protects the exchange's books. It is not an exit you control, so plan to close a losing trade yourself, with a stop, before it gets there.
A stop-loss and liquidation can both close a losing position, but they differ in who chooses. You place a stop at a price you pick, you can move or cancel it, and it closes the trade at the loss you planned. Liquidation fires at a level set by your margin, size and leverage, and it usually takes most of the margin on that position with it. The guide to setting a stop-loss on BloFin walks through placing one on a futures order.
Liquidations also feed on each other. When many traders hold leveraged positions on the same side, a sharp move forces the first of them out with market orders, which pushes the price further and reaches the next group's liquidation levels. That chain is how the October 10, 2025 sell-off grew into a record, as forced selling spread across exchanges and assets (source: CoinDesk). Liquidation heatmaps show where those clusters of leveraged positions sit before a move reaches them.
Mark price vs last price in liquidation
BloFin uses the mark price, not the last traded price, to decide when a position is liquidated (source: BloFin Help Center, Index, Mark and Last Price). This explains a common complaint from liquidated traders, that the chart never reached their level. The chart shows the last price, and that was never the price being checked.
The three prices on a BloFin contract each do a different job. The last price is the most recent trade on BloFin Futures, and it can jump for a moment when one large order hits a thin order book. The index price is a weighted average of spot prices from several major exchanges. The mark price starts from the index and adds a funding basis, so a brief spike on one venue barely moves it, and BloFin uses it for liquidation, margin ratio and unrealized profit and loss (source: BloFin Help Center, Index, Mark and Last Price).
Mark and last price usually sit close together, but they can drift apart in a fast or thinly traded market. That gap is why a position can be liquidated while the candles on a last-price chart still look safely above the level. It is also why a stop set on last price can trigger on a wick that the mark price never reached. BloFin's guide to mark price and last price explains how each one is built.
For a leveraged position, set your stop on the same price that drives liquidation. A TP/SL on BloFin futures triggers on Last by default, and the dropdown beside the trigger price lets you switch it to Mark. You can compare the last, index and mark prices at the top of the BTCUSDT Perpetual page before you set the level.
Isolated vs cross margin and liquidation
Your margin mode decides how much of your account a single bad trade can reach. With isolated margin, only the margin you assign to that position is at risk. With cross margin, your whole futures balance stands behind every open position.
Isolated margin locks a fixed amount of margin to one position, and that amount is the most the position can lose. If it is liquidated, the rest of your futures account and your other positions are unaffected (source: BloFin Help Center, Margin Mechanism). That containment makes isolated margin the sensible default for most traders, and for anyone still learning.
Cross margin uses all the funds in your futures account, plus the profit and loss on every open position, as shared margin. A winning position can hold off liquidation on a losing one, which makes a cross account, at low leverage, harder to liquidate in an ordinary market. The cost comes in a large move, when one position can draw down the whole balance and take every position with it. BloFin notes that cross margin is often used for hedging and quantitative trading (source: BloFin Help Center, Margin Mechanism).
Situation | Margin mode | Why |
|---|---|---|
One position, or still learning | Isolated | The loss stops at the margin you assigned |
High leverage | Isolated | A thin margin buffer on cross can drain the whole balance |
Several longs on related coins | Isolated | They tend to fall together, so shared margin offers little protection |
A hedged book, such as long BTC and short an altcoin | Cross can work | Gains on one side can support the other |
You choose the mode with the Cross or Isolated setting at the top of the futures order panel, next to the leverage. The mode decides how far a loss can spread, but your position size decides whether liquidation ever comes into play.
How to size a position so your stop hits before liquidation
Size a leveraged trade from the loss you are willing to take, never from the most leverage available. Pick the most you will lose on the trade, set your stop where the trade idea is proven wrong, and work out the position that loses exactly that amount at the stop. Liquidation then sits far beyond the stop, as a level the trade should never reach. For example, a 10,000 USDT account risking 1% per trade can lose 100 USDT at the stop, and the table works that through to the margin and position size.
Margin to post = amount you are willing to lose ÷ (stop distance × leverage).
Item | Example 1 | Example 2 |
|---|---|---|
Account size | 10,000 USDT | 50,000 USDT |
Risk per trade (1% of the account) | 100 USDT | 500 USDT |
Stop distance from entry | 2% | 3% |
Leverage | 10x | 5x |
Margin to post | 100 ÷ (0.02 × 10) = 500 USDT | 500 ÷ (0.03 × 5) = about 3,333 USDT |
Position value | 5,000 USDT | About 16,667 USDT |
Loss if the stop fills | 100 USDT | 500 USDT |
Rough liquidation distance on isolated margin | A little under 10% from entry | A little under 20% from entry |
The liquidation distances are approximate because BloFin's formula also takes in the maintenance margin rate and the liquidation fee (source: BloFin Help Center, Liquidation Price Calculation). For the exact figure on your own trade, read the Liq. Price estimate on the order panel before you click.
Keep the liquidation price at least twice as far from your entry as your stop. With a 3% stop, liquidation should sit at least 6% away. Slippage in a sharp move, fees and funding all eat into the gap between the two, and a liquidation price that sits just beyond the stop can be reached before the stop fills. If the order panel shows a Liq. Price inside that margin of safety, lower the leverage on isolated margin, or the size on cross margin, until it moves out. The guide to position sizing in crypto covers how to pick the risk per trade.
Stop-loss orders and exits for leveraged trades
On a leveraged position, the stop has one job: close the trade before liquidation can. That makes the type of stop, and the price it watches, part of your liquidation plan.
A stop-market order is the safer choice for leverage. Once it triggers, it sells at the best price available, which can be below your stop in a fast drop. A stop-limit order never fills worse than its limit price, but when the price gaps through that level it may not fill at all, and the position stays open on its way toward liquidation (source: Investopedia). Even a market stop is an order rather than a promise, and a triggered order on BloFin can still fail because of price limits, position limits or insufficient margin (source: BloFin Help Center, TP/SL). On BTCUSDT and two other large pairs, BloFin's paid Guaranteed SL closes at your exact stop price. Each order has a maximum size, and it does not stop liquidation if the position reaches its liquidation price before the stop triggers (source: BloFin Help Center, Guaranteed SL). The guide to where to place a stop-loss covers how far from entry the stop should go.
The simplest place for a stop on BloFin is the position's own TP/SL. You can set it on the order that opens the trade, or add it later with the TP/SL button on the Positions tab. It stays linked to that position, so BloFin cancels it if the position is liquidated (source: BloFin Help Center, Liquidation FAQ). Standalone trigger orders need more care. The Trigger and Trailing Stop order forms have no Reduce-only box, so if you close the position some other way and forget the stop, it can fire later and open a new position in the opposite direction. Cancel any leftover trigger orders whenever you close a trade by hand.
When you close part of a position yourself with a Limit or Market order, tick Reduce-only. A reduce-only order can only shrink or close the position, and it never opens one on the other side (source: BloFin Help Center, Reduce Only).
A simple way to scale out of a winning leveraged trade:
Open the position with a stop already at the level where the trade idea fails.
When the trade is up by the amount you risked, close about a quarter of it.
Move the stop on the rest to your entry price.
Trail the stop behind the price as the trade keeps moving your way.
Close the rest at your target or when the trailing stop triggers.
How fees, funding and slippage bring liquidation closer
Your margin buffer shrinks even when the price stands still. Trading fees, funding payments and slippage all come out of the equity that keeps a leveraged position open, and on a highly leveraged trade they can move liquidation noticeably closer.
Fees are charged on the full position value, not on your margin, so leverage multiplies their bite. BloFin's regular futures rates are 0.02% for maker orders, which rest on the order book, and 0.06% for taker orders, which fill straight away (source: BloFin fees). At 50x, opening and closing with taker orders costs 0.12% of the position value, which is 6% of your margin before the price moves at all. Using maker orders for both sides cuts that to 2%. BloFin's guide to crypto trading fees covers the full fee picture.
Funding is the regular payment between long and short traders that keeps a perpetual contract's price close to the spot market. When the rate is positive, longs pay shorts, and when it is negative, shorts pay longs. Each payment equals your position's notional value times the funding rate, and it applies only if you hold the position at the settlement time (source: BloFin Help Center, Funding Rates).
How often you pay depends on the contract. Contracts on an 8-hour schedule settle at 12AM, 8AM and 4PM UTC (source: BloFin Help Center, Funding Rates). BTCUSDT and other major contracts use that schedule, while many other BloFin contracts settle every 4 hours and a few settle more often. Each contract shows its interval as Funding Fee Settlement under Contract Info, and the current rate and the countdown to the next payment sit at the top of the trading page.
On a 10,000 USDT long with a funding rate of 0.01%, each payment is 1 USDT. That is 3 USDT a day on an 8-hour contract and 6 USDT a day on a 4-hour one at the same rate. Small rates add up over a long hold, and when the market is crowded on one side, rates can run far higher. Held long enough on the paying side, funding drains the margin that sits between you and liquidation. Being on the receiving side adds to your margin instead. The guide to crypto funding rates explains how the rate is set.
Slippage is the gap between the price you expect and the price you get. On heavily traded pairs like BTCUSDT it is usually small. On thinly traded tokens, a market order can work through several price levels in the order book, so a large position can lose part of its buffer just getting in and out. A position that is large compared with the visible order book is also hard to close quickly when you need to. Spread and slippage shows how to estimate that cost before you trade.
To protect your buffer from these costs:
Use limit orders where you can, to pay the maker rate instead of the taker rate.
Leave extra room between your stop and your liquidation price for fees and funding.
Check the funding rate and interval before you open a trade you plan to hold.
Keep your size small compared with the order book on thinly traded pairs.
Prefer isolated margin, so unexpected costs on one trade stay with that trade.
What to do when a position nears liquidation
When a trade moves against you and the liquidation price gets close, you have three ways out. You can add margin, cut the position, or close it. Each one does something different to your liquidation price, so choose by what you are trying to fix.
Adding margin to an isolated position moves its liquidation price further away, and it is one of the steps BloFin lists for reducing liquidation risk (source: BloFin Help Center, Liquidation FAQ). It also puts more money behind a trade that is already losing, so add margin only if your reason for the trade still holds and your stop stays in place.
Cutting the position with a reduce-only order lowers how much you lose for every 1% the price moves. On isolated margin it typically leaves the liquidation price about where it was, because the margin attached to the position shrinks in step with the size (source: BloFin Help Center, Liquidation Price Calculation). On cross margin, cutting size frees up more of your balance and does push liquidation further away. Either way, a smaller position means the same move costs you less.
Closing the trade is the right call more often than it feels. Close it when any of these is true:
The position has already lost the full amount you set out to risk, or more.
News or a breakdown in the chart has changed the reason you opened it.
Volatility has jumped far past what your stop distance allowed for.
You are trading on fear or hope rather than the plan you made before entry.
If you hold several positions that are all falling together, deal with the largest, or the one most tied to the others, first. On cross margin, a single large position can pull every other position toward liquidation with it.
Pre-trade, in-trade and post-trade checklists
Before you open the trade:
Set the amount you are willing to lose on this trade, as a share of your account.
Choose the stop distance from the chart and the coin's usual volatility.
Work out the margin with the sizing formula above.
Check that the Liq. Price on the order panel is at least twice your stop distance from entry.
Select Isolated unless you are running a hedged book.
Attach the stop-loss as a TP/SL, with Mark as its trigger price.
Check the contract's funding rate and settlement interval.
Check that the order book can absorb your size.
Write your reason for the trade in one sentence.
While the trade is open:
Watch the margin ratio and the liquidation price on the open position.
Move the stop up as the price moves your way, never down.
Take partial profit at the levels you planned.
Note what each funding payment costs or earns you.
If volatility spikes, cut the size rather than widen the stop.
After you close it:
Record the result and how well the orders filled.
Compare the price your stop filled at with its trigger price.
Check whether the gap to liquidation was wide enough.
Write the lesson in your trading journal.
If the loss ran past three times what you planned to risk, take a break before the next trade.
Looking to trade BTC futures? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, and navigate to the BTCUSDT Perpetual page.
Frequently asked questions
Is liquidation the same as a stop-loss?
No. A stop-loss is an order you place at a price you choose, and you can move or cancel it before it triggers. Liquidation is a forced close that BloFin carries out when the mark price reaches your liquidation price, and it usually takes most of the margin on that position. Size the trade so the stop sits well before liquidation, and the stop does the closing while liquidation never comes into play.
Why was I liquidated before the chart reached my liquidation price?
BloFin triggers liquidation on the mark price, while the standard chart shows the last traded price. In a fast or thin market the two can drift apart, so the mark price can reach your liquidation level while the last-price candles stay above it. Compare the mark price at the top of the trading page with your liquidation price, and set your stop on mark price too.
Does lowering leverage always reduce risk?
Only if the position shrinks with it. Cutting leverage from 10x to 5x on the same 10,000 USDT position doubles the margin you put up, but a 2% move still costs 200 USDT. Your loss is set by the position's value and the distance to your stop. On isolated margin, lower leverage does help in one way: it moves the liquidation price further from entry.
Should beginners use isolated or cross margin?
Isolated, in most cases. It caps the loss on each position at the margin you assigned to it, so one bad trade cannot drain the rest of your futures account. Cross margin can suit experienced traders running hedged positions that offset each other. Beginners more often hold several longs on related coins that fall together, and on cross margin that shared drop can pull the whole balance toward liquidation.
Can fees and funding bring liquidation closer?
They can bring it closer. Trading fees are charged on the full position value at entry and exit, and funding is paid at every settlement while you hold, every 8 hours on BTCUSDT and every 4 hours on many other contracts. On a highly leveraged position held on the paying side of funding, those costs drain the margin that keeps it open, and over days or weeks they can push it toward liquidation.
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. All facts independently verified. Sources include BloFin Help Center articles on liquidation, liquidation price calculation, index, mark and last price, funding rates, margin modes, reduce-only and TP/SL orders, the BloFin fee schedule and BTCUSDT Perpetual contract information, CoinDesk Research's report on the October 10, 2025 liquidations, and Investopedia, current as of October 29, 2026.
Nothing in this article constitutes financial advice. Leveraged futures can lose the full margin on a position, and on cross margin the full futures balance. A stop-loss limits a loss only if it triggers and fills, and in a fast market liquidation can arrive first. Liquidation prices shown on the order panel are estimates that move with margin, fees and funding. Funding intervals, fee rates and margin rules are set by BloFin and can change, so check the contract information before you trade. Do your own research and consider your risk tolerance before you trade futures on BloFin.