Margin & liquidation in derivatives
If you trade leveraged futures or perpetuals, margin is your lifeline. Most accounts die not from bad analysis but from not understanding HOW and WHEN the exchange liquidates you. This module covers margin modes, position modes, the liquidation price and how to protect yourself from manipulation wicks.
By the TradingCalculator.Pro team · Updated on · About us
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Isolated margin
Each position has its OWN margin: if it gets liquidated you only lose what you assigned to that trade — the rest of your account stays untouched. Recommended for beginners and for high leverage, because the maximum damage is capped in advance. Downside: liquidation comes sooner, since only that margin backs you.
Cross margin
Your ENTIRE available balance backs ALL your positions. Liquidation sits further away (more cushion), but if price runs hard against you, a single trade can drain the WHOLE account. Useful for hedging and experienced traders with measured risk; lethal combined with overleverage and no stop loss.
Position mode: one-way (averages) vs hedge (separate)
In one-way mode you can only be long OR short: every additional entry in the same direction is AVERAGED into a single position, with a new average price and a new liquidation. In hedge mode you can hold a long AND a short at the same time, separately, each with its own margin. Hedge mode feels "safe", but you pay double fees and double funding — and it often just hides refusing to admit the entry was wrong.
Liquidation price & maintenance margin
The exchange requires a minimum to keep a position open (maintenance margin, ~0.4-1%). When unrealized losses eat your margin down to that minimum, the engine force-closes your position and charges a liquidation fee on top. At 100x, a ~0.5-0.8% move against you is enough. ALWAYS check the liquidation price before confirming — and never use it as a "free stop": you lose more than with a real SL.
Mark price vs last price vs index price
Last price = the latest trade on THAT exchange (manipulable with little volume). Index price = volume-weighted spot average across several major exchanges. Mark price = index adjusted by the basis; it is the "fair" price serious platforms use to compute unrealized PnL and LIQUIDATIONS. If your platform liquidates on last price, a single local wick can take you out even though the global market never touched your level. Verify it in the docs before depositing.
Funding rate
Perpetuals never expire; funding keeps their price pinned to spot: usually every 8h, longs pay shorts when the perp trades above the index, and vice versa. Holding against high funding bleeds you daily (0.01% × 3/day sounds small; at 10x it is not). Extreme funding (>0.1%/8h) = a market crowded in one direction: a contrarian signal and fuel for squeezes.
Liquidation wicks & cascades
Thousands of traders' liquidation levels cluster in predictable zones (below obvious lows, above highs). A push into that zone triggers forced liquidations, which are market orders → they move price further → liquidating the next cluster: a cascade. On small, thin exchanges a 'scam wick' can sweep positions while the broader market barely moves. That is why mark price and WHERE you trade matter.
Anti-manipulation engines (MP Shield-style)
Some exchanges — Margex with its MP Shield™, and serious venues in general via a composite mark price — aggregate prices from 12+ liquidity sources and discard sharp deviations from any single source, so an artificial wick on one exchange cannot liquidate you. It is not magic: it does NOT protect you from a real market move. Check your platform: does it liquidate on mark/composite index? Does it publish the index composition? Does it have an insurance fund and transparent ADL?