About

Trading futures contracts with leverage introduces significant risk, particularly the danger of liquidation. When a trader adds to an existing position at a different price, not only does the Average Entry Price change, but the Liquidation Price shifts dramatically based on the new margin utilized. Miscalculating this can result in an immediate margin call if the market is volatile.

This calculator is designed for derivatives traders (Crypto, Commodities, Indices). It computes the new weighted average entry and estimates the new Liquidation Price based on Isolated Margin logic. It accounts for contract size multipliers and leverage settings, helping traders visualize how "doubling down" affects their safety buffer against market movements.

Formulas

1. New Average Entry (P_avg):

P_avg = Total ValueTotal Contracts

2. Estimated Liquidation Price (P_liq) for Longs:

Using the Isolated Margin model where MMR is Maintenance Margin Rate and L is Leverage:

P_liq ≈ P_entry × (1 − 1L + MMR)

Note: This is a simplified estimation. Exchanges differ slightly in their bankruptcy price vs liquidation engine logic.

Reference Data

Factor	Impact on Liquidation Price
Higher Leverage	Moves Liquidation Price CLOSER to Entry (Higher Risk)
Adding Margin	Moves Liquidation Price FURTHER from Entry (Lower Risk)
Averaging Down	Lowers Entry, but increases Position Size (Risk varies)
Maintenance Margin	Static % required by exchange (e.g., 0.5% for BTC)
Funding Rates	Can slowly eat into margin, shifting Liq Price over time

Frequently Asked Questions

Isolated Margin limits your loss to the specific funds allocated to that position. Cross Margin uses your entire account balance to prevent liquidation. This tool estimates based on Isolated Margin logic for safety calculations.

Every exchange (Binance, Bybit, CME) has slightly different formulas involving insurance funds, taker fees, and bankruptcy prices. This calculator provides a "safe zone" estimate, but you should always leave a buffer.

No. Leverage only affects your Margin (collateral) and Liquidation Price. The Average Entry Price is strictly mathematical based on the price of the asset and quantity bought.

For standard futures (like ES or CL), a 1-point move equals a specific dollar amount (e.g., $50). For Crypto, 1 contract is often 1 USD or 1 Coin. Ensure you know your contract specs.