> For the complete documentation index, see [llms.txt](https://docs.tryliquid.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tryliquid.xyz/trading/liquidations.md).

# Liquidations

What a liquidation is, how mark price and maintenance margin trigger it, how cross and isolated margin liquidations differ, and how to avoid being liquidated on Liquid.

A **liquidation** occurs when a position moves against you and your account equity falls below the required **maintenance margin**.

Maintenance margin is the minimum collateral required to keep a position open. It is lower than the initial margin required to open the trade, and the exact requirement depends on the market and its maximum leverage.

If account equity drops below maintenance margin, the position is reduced or closed to prevent further losses. Your estimated liquidation price is shown on the order ticket before you confirm and on every open position.

### What Happens During a Liquidation

When a position becomes liquidatable, the system follows a two-step process:

**1. Market liquidation attempt.** The position is closed (fully or partially) by submitting market orders to the order book. The order may fill fully or partially depending on available liquidity. If enough of the position is closed to restore margin requirements, the remainder stays open, and any remaining collateral stays with you.

**2. Backstop liquidation.** If the position cannot be liquidated through the order book and the account deteriorates further, the position and its associated collateral are transferred to a designated backstop liquidator vault. This is a failsafe that keeps the system solvent during fast markets or poor liquidity conditions.

### Cross vs. Isolated Margin Liquidations

**Cross margin liquidation** can affect your shared collateral balance. If a cross position is backstop liquidated, your cross positions and cross collateral may be transferred as part of the process, which can result in losing most or all of your cross margin equity.

**Isolated margin liquidation** affects only the isolated position and its isolated collateral. Your cross margin balance and other positions remain untouched.

### Why Some Margin May Not Be Returned

During a backstop liquidation, some or all of the maintenance margin may not be returned. The backstop liquidator needs a buffer to absorb risk and execute liquidations safely in volatile conditions.

### Mark Price and Liquidations

Liquidations are triggered using the **mark price**, not the last traded price. The mark price reflects fair market value by combining external reference pricing with on-platform order book conditions, which reduces the chance of unfair liquidations caused by short-term price spikes or thin liquidity.

* In volatile markets, mark price may differ from the visible book price
* Highly leveraged positions are more sensitive to small mark price movements
* Monitor your liquidation price using the mark price shown in the app

### Partial Liquidations

For larger positions, only a portion of the position may be liquidated at first. This reduces market impact, gives you a chance to restore margin requirements, and improves execution in thinner markets. A short cooldown may apply after a partial liquidation, during which a full-position liquidation can be forced if risk continues to worsen.

### How to Avoid Liquidation

* **Use lower multipliers.** A 5x position needs a 20% adverse move to be liquidated; a 50x position needs only about 2%.
* **Set a stop loss.** A [stop loss](/trading/take-profit-stop-loss.md) above your liquidation price exits on your terms and keeps more of your collateral.
* **Monitor margin.** Watch the liquidation price on the Positions tab, or ask Co-Invest "which of my positions is closest to liquidation?"
* **Add margin or reduce size** before thresholds are reached.