Biconomy.com currently offers USDT-M Perpetual Futures, supporting leverage of up to 100x. While leverage can amplify potential profits, it also increases the risk of forced liquidation.
To help futures traders better understand and reduce liquidation risks, this article summarizes several common questions about forced liquidation in futures trading. After reading this guide, you will gain a clearer understanding of the liquidation mechanism on Biconomy.com and trade futures more effectively.
1. Liquidation Is Triggered by the Mark Price
In the Biconomy.com futures trading system, it is important to understand that forced liquidation is calculated based on the Mark Price, rather than the Last Price or Index Price.
The Mark Price is a fair price derived from a comprehensive calculation based on both the Index Price and the Last Price. Therefore, the Mark Price may deviate from the latest traded price.
For more details about the Index Price, Mark Price, and Last Price, please refer to the article:
“Index Price, Mark Price and Last Price.”
Using the Mark Price helps prevent abnormal liquidations caused by insufficient market liquidity or market manipulation.
When the Mark Price reaches your liquidation price, the system will trigger forced liquidation.
On the Biconomy.com trading interface, you can select “Mark Price” above the K-line chart to view the Mark Price.
2. Changes in the Liquidation Price
In theory, the liquidation price should remain constant. However, due to dynamic changes in margin and trading mechanisms, the liquidation price may change in certain situations.
(1) Different Margin Modes
The liquidation price behaves differently under Cross Margin Mode and Isolated Margin Mode.
Cross Margin Mode
In Cross Margin Mode, all available margin in the account is used as position margin.
If you hold multiple positions:
- Unrealized PNL will affect the liquidation price
- Increased unrealized profit → liquidation price decreases
- Increased unrealized loss → liquidation price increases
Additionally, in Cross Margin Mode:
- Changes in position size
- Changes in margin balance
may also cause the liquidation price to change.
When the margin ratio reaches 100%, the system may transfer part of your position to the liquidation engine at the liquidation price.
Isolated Margin Mode
In Isolated Margin Mode:
Each position has independent margin ,The liquidation price generally remains unchanged
unless the following situations occur:
Changes in the opening price Increasing the position size Adjustments to the margin
(2) Funding Fees
Funding fees can also affect the liquidation price.
In Cross Margin Mode:
Receiving or paying funding fees changes the margin balance This may cause the liquidation price to change
In Isolated Margin Mode:
If funding fees are received, the liquidation price remains unchanged If funding fees are paid and available margin is insufficient, the system will deduct the position margin, which may change the liquidation price
Therefore, the liquidation price may be affected by:
Margin mode
Margin balance
Funding fee changes
Traders should be aware of these factors when opening positions.
3. Stop-Loss (SL) Order Failure
When trading futures on Biconomy.com, there may be situations where Stop-Loss (SL) orders fail to execute. This may occur due to the following reasons:
① Unreasonable Stop-Loss Price
If the stop-loss price is set too close to the liquidation price, liquidation may occur before the stop-loss order is triggered, causing the SL order to fail.
② Extreme Market Volatility
After TP/SL is triggered, the order will be executed as a market order.
During extreme market volatility:The market price may quickly move past the trigger price This may result in the stop-loss order being partially executed or not executed at all
In such situations, you may:Wait for the order to be fully executed Cancel the order based on your risk preference
③ Other Reasons
Stop-loss orders may also fail due to:
Insufficient closeable positions
The futures contract being in a non-trading state
System issues or other technical reasons
Please also note that Biconomy.com TP/SL orders are market-triggered orders, so there may be a price difference between the trigger price and the execution price.
Risk Reminder
Futures trading involves significant risk. To reduce the likelihood of forced liquidation, users are advised to:
Monitor margin ratios regularly Set stop-loss orders properly Use reasonable leverage levels
For more information about futures trading, please refer to other futures-related articles in Biconomy.com Learn.
Disclaimer
Cryptocurrency trading involves substantial risk. This information is provided for informational purposes only and does not constitute investment, tax, legal, financial, accounting, or other professional advice.
Biconomy.com Learn does not provide investment advice. Please ensure that you fully understand the risks involved before making any investment decisions. All investment activities are conducted independently by users and are not directed by this platform.