Mozahem

Did you know that the Binance platform liquidates futures accounts before the price of the asset reaches the liquidation price? What just happened was strange. I entered a futures position with an amount of $4, and when the loss reached only $1.1, they liquidated the position and informed me with the following message:

Dear Binance user,

We regret to inform you that the AUCTIONUSDT position in your USDⓈ-M futures account has been liquidated because your USDT margin balance of 2.937621 was below the required maintenance margin of 2.940508 USDT. Please be aware that your positions may be partially liquidated in a cross-margin scenario.

At the time of liquidation, the mark price for AUCTIONUSDT was 26.242827.

About liquidation

Liquidation is triggered when margin balance = wallet balance + unrealized profit and loss < maintenance margin, meaning that the market price (not the last price) reaches the liquidation price, and the risk ratio rises to 100%. The liquidation price is determined based on the entry price, position size, and margin balance, and can be calculated using our calculator before opening any position. Check out the liquidation protocol.

Account liquidation fees are charged to the insurance fund, which is a safety net that protects bankrupt traders from negative losses and ensures the full disbursement of profits to winning traders. Learn more about the insurance fund.