What is the formula for calculating liquidation price of a long position? (2024)

FAQs

What is the formula for calculating liquidation price of a long position? ›

Long position: Liquidation Price = (Equity - |Position| * Avg. Open Price) / ( |Position|* (Maintenance Margin Rate + Liquidation Fee Rate - 1)) Short position: Liquidation Price = (Equity + |Position| * Avg. Open Price) / ( |Position| * (Maintenance Margin Rate + Liquidation Fee Rate + 1))

The formula, Liquidation price=Entry price1+(Leverage×(1−Initial margin ratio))Liquidation price=1+(Leverage×(1−Initial margin ratio))Entry price, incorporates entry price, leverage, and initial margin ratio. This informs traders of the point at which their position will be automatically closed.

Liquidation Price (Long) = Entry Price - [(Initial Margin - Maintenance Margin)/Position Size] - (Extra Margin Added/Position Size) For Sell/Short: Liquidation Price (Short) = Entry Price + [(Initial Margin - Maintenance Margin)/Position Size] + (Extra Margin Added/Position Size)

How to Calculate Liquidation Value. Liquidation value can be calculated by removing the value of all assets and liabilities of a company from its financial report. The subtraction of liabilities from assets will give investors the liquidation value.

Definition. The liquidation level is the price at which the broker forcibly closes a trader's position to prevent further losses, This typically happens when the trader hasn't met a previous margin call.

In the case of a long position with cross margin, the liquidation price is: Entry price / (1 + (Balance / Position size)) , while for a short position with cross margin it is Entry price / (1 - (Balance / Position size)) .

After notice of a decision making process has been sent to creditors, a physical meeting can be requestiioned if either of the following conditions is met: 10% of the value of creditors request a meeting. 10% of the total number of creditors request a meeting. 10 individual creditors request a meeting.

The price is calculated by looking at the loss that can be sustained in the account and what price movement for the assets would trigger such a loss.

If an investor or trader holds a long position, the liquidation margin is equal to what the investor or trader would retain if the position were closed. If a trader has a short position, the liquidation margin is equal to what the trader would owe to purchase the security.

This is calculated by starting with the greater of the fair market value (FMV) of the assets distributed or the carrying amount of liabilities assumed by the shareholders. Then subtract adjusted tax basis of the assets. Your answer is the gain or loss to be recognized.

How do you calculate net liquidating value? ›

Your net liquidation value reflects how much the contents of your portfolio would be worth if you were to liquidate everything at the current market price. Net liquidating value can be calculated by adding your total cash, plus your market value in longs, minus your market value in shorts.

Liquidation value is the likely price of an asset when it is allowed insufficient time to sell on the open market, thereby reducing its exposure to potential buyers. Liquidation value is typically lower than fair market value.

While liquidation, the Liquidation value of Liabilities = Book Value of Liabilities. So the formula above becomes, Liquidation Value Formula = Liquidation Value of Assets - Book Value of Liabilities.

The Expected Liquidation Price is an estimation of the price at which the current product would need to reach to cause a liquidation. This price is based on the current market value of the position you currently hold. It is also a function of positions in other derivatives you hold.

'Long' trades are bets that the price will go up, and long liquidations happen when these trades get closed. 'Short' trades are bets that the price will go down, and short liquidations occur on these positions.

Often times, liquidation is the act of selling off your futures position in exchange for cash. Once you have liquidated you positions for a cash exchange, that cash will then go into your account where you may decide to purchase other contracts or withdraw for personal use.

Being liquidated while shorting cryptocurrency margins occurs when the price of the cryptocurrency moves against your short position, reaching a level where the exchange automatically closes your position to limit further losses.