When the mark price is high, and you want to **estimate the liquidation price, the dynamics depend on whether you're holding a long or short position in a leveraged trade, typically on platforms like Binance or Bybit.
Key Concepts:
Mark Price: A fair price estimate used to avoid unnecessary liquidations due to market manipulation. It's often based on an index price rather than the last traded price.
* **Liquidation Price**: The price at which your position will be forcefully closed by the exchange to prevent your account from going into negative equity.
If You're in a Long Position :
You profit if the price goes up, and you get liquidated if it drops too far.
High mark price → closer to your entry price or above it.
If the mark price is high, your liquidation price will be * lower *, since the gap between current price and liquidation price is wider.
You're safer from liquidation, assuming no drastic price reversals.
Example:
Entry price: \$100
Leverage: 10x
Mark price: \$110 (high)
Liquidation price: \~\$91 (roughly, varies by margin, fees, etc.)
If You're in a Short Position:
You profit if the price goes down, and you get liquidated if it rises too much.
High mark price brings you closer to liquidation.
Your liquidation price becomes higher, and you're more at risk.
Example:
Entry price: \$100
Leverage: 10x
Mark price: \$110 (high)
Liquidation price: \~\$109 (very close)
let's summarize:
High mark price favors longs, giving more buffer before liquidation.
High mark price hurts shorts, bringing them closer to liquidation.
Liquidity price estimate depends on entry price, leverage, margin balance, and the current mark price.
Would you like help calculating an exact liquidation price for a specific trade setup?
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