The liquidation price for an open position represent the price at which the position will be automatically closed by the system when the trader's collateral is insufficient to maintain the position.
For Long Positions
Liquidation occurs when the current token price falls below the liquidation price.
Example: If the liquidation price is $90, the long position will be closed if the price of the token falls below $90.
Liquidation price for long positions can be calculated as follow:
For Short Positions
Liquidation occurs when the current token price rises above the liquidation price.
Example: If the liquidation price is $110, the short position will be closed if the token price rises above $110.
Liquidation price for short positions can be calculated as follow:
where,
- price: The average price (USD) of the position
- collateral_size: The collateral size (USD) for the position
- close_fee: The fee (USD) charged for closing the position
- borrow_fee: The accumulated borrowing fees (USD) for maintaining a leveraged position
- size: The size (USD) of the position
- max_lev: The maximum allowed leverage (500x is the maximum allowed leverage in the Jupiter Perpetuals exchange for now)
Liquidation Price
The liquidation price changes over time as it is affected by fees, particularly with leverage exceeding 10x and the accumulation of borrow fees over extended position durations. Regularly monitoring your liquidation price is essential.
To mitigate the risk of liquidation, collateral adjustments and leverage fine-tuning can be performed through the Edit button in the position row, offering an avenue to add collateral and enhance the liquidation price.
Liquidation Penalty
When a position is liquidated, any remaining collateral is collected by the protocol and distributed to the JLP as liquidation fees.
⚠️ This means you will lose your entire collateral when the position is liquidated.
Please ensure you're monitoring your liquidation price and only depositing collateral that is within your risk appetite