How leverage changes your distance to liquidation
Distance to liquidation, as a fraction of entry, is approximately 1 ÷ leverage − maintenance margin rate. Because leverage sits in a denominator, the distance shrinks along a curve rather than a line: each doubling of leverage removes roughly half of the room that was left, and the maintenance rate takes a growing share of what remains.
This page is about that geometry — what each step up in leverage costs in room, and how to compare the result with your stop and with how much the instrument normally moves. The separate point that leverage does not change what a stopped-out trade costs is made in leverage is not risk.
The table
Isolated margin on a linear perpetual, entry 60,000, and an illustrative maintenance margin rate of 0.5%. The same numbers come out of the liquidation price calculator one row at a time.
| Leverage | Initial margin rate | Distance to liquidation | Long liquidation | Short liquidation | Maintenance as share of initial margin |
|---|---|---|---|---|---|
| 2× | 50% | 49.5% | 30,300 | 89,700 | 1% |
| 3× | 33.3% | 32.8% | 40,300 | 79,700 | 1.5% |
| 5× | 20% | 19.5% | 48,300 | 71,700 | 2.5% |
| 10× | 10% | 9.5% | 54,300 | 65,700 | 5% |
| 20× | 5% | 4.5% | 57,300 | 62,700 | 10% |
| 25× | 4% | 3.5% | 57,900 | 62,100 | 12.5% |
| 50× | 2% | 1.5% | 59,100 | 60,900 | 25% |
| 100× | 1% | 0.5% | 59,700 | 60,300 | 50% |
Where the formula comes from, step by step, is in how liquidation price is calculated.
Why it is a curve, not a line
Read the table as steps rather than rows:
| Step | Distance before → after | Points lost | Share of remaining room lost |
|---|---|---|---|
| 2× → 5× | 49.5% → 19.5% | 30 | 60.6% |
| 5× → 10× | 19.5% → 9.5% | 10 | 51.3% |
| 10× → 20× | 9.5% → 4.5% | 5 | 52.6% |
| 20× → 50× | 4.5% → 1.5% | 3 | 66.7% |
| 50× → 100× | 1.5% → 0.5% | 1 | 66.7% |
The points lost get smaller, which makes the higher steps look cheap. The share of remaining room lost never does. Going from 20× to 50× costs “only” 3 percentage points, and those 3 points are two-thirds of the room you had.
This is why intuition about leverage is unreliable at the high end. Moving from 2× to 3× feels like the same kind of decision as moving from 20× to 30×; in proportional terms the second is much larger.
The maintenance rate’s growing share
The last column of the first table is the part people miss. At 2×, maintenance is 1% of the margin you posted — irrelevant. At 50× it is a quarter, and at 100× it is half. The distance to liquidation is the initial margin rate minus maintenance, so at high leverage a small change in the maintenance rate is a large change in the room.
With the same illustrative numbers, raising the maintenance rate from 0.5% to 1.0% moves the 5× distance from 19.5% to 19.0%. At 50× it moves from 1.5% to 1.0% — a third of the room gone. Since venues apply higher maintenance rates to larger positions (see what is maintenance margin), scaling up a high-leverage position is where this bites.
Carry the arithmetic to its end and there is a leverage at which the initial margin rate equals the maintenance rate — 200× at 0.5% — where a position would be liquidatable on entry. Venues cap leverage below that point for each tier; we are not quoting any venue’s caps here.
Translating distance into ordinary moves
A distance means little until it is compared with how far the instrument normally moves. Take an illustrative instrument whose typical daily range is 3%:
| Leverage | Distance | In typical daily ranges |
|---|---|---|
| 5× | 19.5% | 6.5 |
| 10× | 9.5% | 3.2 |
| 20× | 4.5% | 1.5 |
| 50× | 1.5% | 0.5 |
At 50×, liquidation sits inside an ordinary day’s range. That is not a forecast about any day; it is a description of how little room the position has relative to noise. The same comparison, applied to stops rather than liquidation, is the argument in volatility and stop distance.
Leverage setting vs effective leverage
Two different numbers get called leverage, and they answer different questions.
- The isolated leverage setting is how much margin you post per unit of notional in one position. It sets the liquidation distance.
- Effective leverage is total notional ÷ account equity. It is what the position size calculator reports as “leverage needed”, and it says nothing about where liquidation sits.
Example: a 10,000 account holds 5,000 of notional, so effective leverage is 0.5×. At a 20× isolated setting the position has 250 of margin behind it and liquidates 4.5% away. At 2× it has 2,500 behind it and liquidates 49.5% away. Same position, same loss at the stop — very different liquidation distances.
The setting also caps what liquidation costs. On a fixed 30,000 of notional, the loss absorbed before liquidation is roughly margin minus maintenance:
| Setting | Margin posted | Loss at liquidation |
|---|---|---|
| 5× | 6,000 | 5,850 |
| 10× | 3,000 | 2,850 |
| 20× | 1,500 | 1,350 |
| 50× | 600 | 450 |
Higher settings put less margin at stake and make liquidation more likely. Under cross margin none of this holds: the setting does not determine the distance, account equity does — see isolated vs cross margin.
Where the boundary should sit
Compare the estimated liquidation distance with the planned stop distance.
In this approximation they coincide when 1 ÷ leverage − MMR = stop %:
max leverage = 1 ÷ (stop % + MMR)With a 2% stop and the illustrative 0.5% rate, that is 40×. This is an equality threshold, not a safe maximum or proof that a stop will fill below it. Different trigger-price references and slippage can invalidate that ordering; see Bybit’s execution and liquidation FAQ, checked on 2026-10-25. The leverage and stop-loss table computes it for your inputs, and max leverage for a stop distance works through the rule. Leave room below it: fees, paid funding and a higher tier all pull liquidation toward the entry after you open, as shown in why your liquidation price changes.
Venue liquidation engines add tiered maintenance, mark-price rules and account-level margin on top of this model. The venue calculators for Binance Futures, Bybit, OKX and Hyperliquid cover those details.
FAQ
How does leverage affect liquidation price?
Higher leverage means a smaller initial margin rate, so less room before equity falls to the maintenance requirement. Distance to liquidation is roughly one divided by leverage minus the maintenance rate: with an illustrative 0.5% rate, about 9.5% at 10×, 4.5% at 20× and 1.5% at 50×.
What leverage gets liquidated by a 1% move?
Using the approximation, the leverage at which distance equals 1% is one divided by the sum of 1% and the maintenance rate. With an illustrative maintenance rate of 0.5%, that is about 67×. Any higher leverage liquidates on a smaller move, and fees or paid funding lower the threshold further.
Is the liquidation distance the same for longs and shorts?
In the simple formula, yes — the same percentage below entry for a long as above it for a short. Measured more precisely, with maintenance on the notional at the liquidation price, the two differ very slightly. The larger practical difference is that price can rise without limit, so a short at low leverage can still be liquidated, while a long’s distance is bounded by the price reaching zero.
Does doubling leverage halve the distance to liquidation?
Slightly more than halves it, because the maintenance rate is subtracted from a smaller number. With an illustrative 0.5% rate, going from 10× to 20× takes the distance from 9.5% to 4.5%, a loss of just over half the remaining room.