Liquidation Price Calculator Online

The Liquidation Price Calculator is a crucial tool utilize in trading to determine the price at which a trader would face losses and potentially have their position liquidated. Its primary function revolves around calculating the liquidation price, a critical marker for risk management.

Formula of Liquidation Price Calculator

The formula for calculating the liquidation price is straightforward:

Liquidation Price = Entry Price - (Position Size / Leverage)

Where:

• Entry Price: This refers to the price at which the trader enters a trade.
• Position Size: It denotes the size of the trader's position, typically represented in the quantity of the asset held.
• Leverage: This is the factor by which a trader can multiply their position.

If the trader is in a short (sell) position, the formula slightly differs:

Liquidation Price = Entry Price + (Position Size / Leverage)

This calculation is pivotal as it aids traders in understanding their risk exposure and establishes a threshold to prevent significant losses.

Table of General Terms

Term	Description
Entry Price	The initial price at which a trader enters a trade.
Position Size	The quantity or size of the asset a trader is holding.
Leverage	The ratio determining the borrowing capacity of a trader.
Liquidation	The point at which a trader's position is forcibly closed.

This table provides a quick reference for terms related to the Liquidation Price Calculator, aiding users in understanding the terms used in trading environments.

Example of Liquidation Price Calculator

Suppose a trader enters a long position with an entry price of $10,000, a position size of 5 BTC, and a leverage of 25x. Using the liquidation price formula, the calculation would be as follows:

Liquidation Price = $10,000 - (5 BTC / 25) = $10,000 - $200 = $9,800

This means that if the asset's price drops to $9,800, the trader's position would reach the liquidation point.

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