Mexc Futures C’est

Liquidation is a crucial event that every trader should understand when participating in futures trading. In this article, we will explore the concept of liquidation in MEXC Futures and its key features. We will also provide a step-by-step guide on how to calculate the liquidation price to help you minimize risks and avoid unnecessary losses.

Understanding Liquidation

Liquidation occurs when the margin of a futures position reaches the maintenance margin requirement. When this happens, all your futures positions will be liquidated, resulting in the loss of the maintenance margin. The trigger for liquidation is when the fair price reaches the maintenance margin.

Features of Liquidation

Liquidation in MEXC Futures is based on the fair price, which is determined using fair price marking. This method helps prevent liquidation due to market manipulation or illiquidity. Additionally, larger position sizes require higher margin levels to adhere to risk limits. This allows the liquidation system to effectively close large positions that would otherwise be difficult to close safely. If possible, larger positions are incrementally liquidated.

In the event of liquidation, MEXC will cancel any open orders on the current futures contract to free up margin and maintain the position. It’s important to note that orders on other futures contracts will still remain open. MEXC employs a partial liquidation process, automatically reducing the maintenance margin, to avoid a full liquidation of a trader’s position.

Calculating the Liquidation Price

To understand the liquidation price, let’s use an example:

Suppose you buy a 0.1 BTC position of BTCUSDT futures at 50,000 USDT with an initial leverage of 25x.

Maintenance Margin = 50000 0.1 0.4% = 20 USDT
Position Margin = 50000 * 0.1 / 25 = 200 USDT

Liquidation Price for the Long position = (200 – 29 + 50000 * 0.01) / 0.1 = 51,800 USDT

Liquidation Price under Different Position Modes

MEXC Futures offers two position modes: isolated margin and cross margin. Under isolated margin mode, the liquidation price is calculated based on the formula mentioned earlier, with the margin being the isolated margin. Traders have the option to manually add margin to reduce risk.

On the other hand, under cross margin mode, the margin is the entire available balance. However, it’s important to note that the loss of wallet balance cannot serve as margin for other positions in cross margin mode. Adding additional margin manually can increase the gap between the liquidation price and the opening price, reducing the risk when the liquidation risk is high.

Risk Limit

MEXC Futures provides a risk limit for each account, ensuring that larger positions are subject to less frequent liquidation. As your position size increases, the required initial margin and maintenance margin will also increase. The margin rate will be adjusted based on the risk limit.

You can check and modify your risk limit to manage your trading risks effectively.

Conclusion

In conclusion, understanding how liquidation works in MEXC Futures is vital for your success as a futures trader. Pay close attention to the liquidation price changes when trading futures and add margins on time to avoid unnecessary losses. By grasping the concept of liquidation and implementing risk management strategies, you can navigate the futures market with confidence and maximize your chances of success.

Remember, it’s always essential to stay informed and make informed decisions when engaging in futures trading on Binance.