Bankruptcy Price

Glossary · Derivatives

The bankruptcy price is the price at which a leveraged position's losses equal its entire margin — the point where the account balance for that position hits zero. Liquidation is triggered before it, at the maintenance-margin level, so the engine has room to close the trade before the exchange is out of pocket.

"Liquidation price is where they pull the plug; bankruptcy price is where you would owe them money — the gap between the two is the exchange protecting itself, not you."

With 10x leverage and a long from $100, the bankruptcy price is roughly $90: a 10% move against you erases 100% of margin. Maintenance margin at 0.5% moves the liquidation trigger to about $90.50, so the engine starts closing before the hole opens. Exchanges price liquidations at the mark price, not the last trade, to keep a single spoofed print from triggering them. Liquidation streams publish the fill at the bankruptcy price on some venues, which is why our recorder sizes OKX liquidations that way.

The trap is treating the liquidation price as the risk: the real risk is the distance between where you can get out and where you are forced out. A stop placed inside that band is still a stop that a wick can take; a stop placed by structure — below the level that invalidates the trade — is a decision you made.

What got force-closed, hour by hour

Related jargon

Questions

What is Bankruptcy Price in crypto trading?

The bankruptcy price is the price at which a leveraged position's losses equal its entire margin — the point where the account balance for that position hits zero. Liquidation is triggered before it, at the maintenance-margin level, so the engine has room to close the trade before the exchange is out of pocket.

How would a trader say it?

Liquidation price is where they pull the plug; bankruptcy price is where you would owe them money — the gap between the two is the exchange protecting itself, not you.

Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.

Crypto Jargon

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