Giordano Salvatori, founder of STA · 03/11/2026 · 5 minutes read
When you open a position with leverage, you don't put up the whole value of the trade: you deposit a part, the margin, and the platform lends you the rest. The margin acts as collateral. If the price moves against you and the loss gets close to that margin, the platform closes the position for you, on its own, without asking. That forced closing is called liquidation.
What surprises beginners is something else: the price doesn't need to go to zero. With high leverage a small move is enough. And when it triggers, you usually lose the whole margin of that position, not just part of it.
The liquidation price is the level where the margin can no longer hold. A simple estimate, to get the order of magnitude: the distance from the entry price is about 100 divided by the leverage, in percent. With 5x leverage that is about 20%, with 10x about 10%.
| Leverage | Move against you that brings the price close to liquidation |
|---|---|
| 2 | about 50% |
| 3 | about 33% |
| 5 | about 20% |
| 10 | about 10% |
| 20 | about 5% |
Illustrative example, not an STA result: you buy a coin at 100 with 5x leverage. The estimated liquidation level is around 80. For a short position the reasoning mirrors: the price rises, and the level sits about 20% above your entry.
Note: this is an estimate. Every platform adds a minimum maintenance margin, and fees and funding rate eat a bit of margin over time, so the real level is closer to your entry than the formula says. The exact number is shown by the platform, or by the leverage calculator.
For three reasons that often add up. The first is leverage: the higher it is, the closer the liquidation level gets to your entry. The second is volatility: in crypto markets a 5% move in a few hours is no exception, and in those hours prices can spike to touch the level and then come back. The third is a position that is too big for the account: with little free margin, there is no cushion.
The liquidation of one position can drag others down with it. When many positions are force-closed at the same moment, the closings themselves push the price in the same direction and trigger more of them. This is called a liquidation cascade.
Once the level is reached, the platform closes the position at the market price of that moment. In fast markets the closing price can be a bit worse than expected, because the price moves between the order and the execution. If the loss exceeds the margin, many platforms cover the difference with an internal guarantee fund; the details change from one platform to another and are written in its terms, which are worth reading before you use leverage.
No, and the difference matters a lot. The stop loss you choose it yourself, before entering, at a level that for you says "the idea was wrong". Liquidation is decided by the platform, at a level that depends on the margin, and it takes away everything you put into that position. If your stop is closer than the liquidation price, you exit first, with a loss you had decided in advance. If your stop is beyond the liquidation level, it is useless: the platform closes first.
These are rules of prudence, not a promise: whoever follows them can still lose, because the risk remains. But they remove the most brutal part, the one where your account is closed by someone else. The overall view is on the page about risk management.
The most honest way to understand liquidation is to see it up close with fake money. On a demo account you can open a position with high leverage, see where the liquidation level sits and watch what happens when the price comes close to it, without losing a cent. If you are starting from zero, the full path is in the guide to mindful online trading.
Every STA card is born with its stop, decided before entering and designed to trigger before any liquidation level. Ten artificial intelligence agents analyze the markets twice a day, with a debate between a Bull and a Bear, across 175 markets on OKX Europe, including 44 US stocks and ETFs, and the funds stay in your OKX account.
The DEMO is free forever, with real prices and the same cards as REAL. You need an account. During the launch phase, which began on 16 October 2026, STA's fees are temporarily disabled, even in REAL; the ordinary price list, suspended while the launch lasts, is 18% of the positive net result of each day, with no offsetting of losses. The history of the cards, losses included, is public on GitHub.
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Try DEMO for free →This article is for information only and is not investment advice. Trading crypto-assets involves a high risk, including the total loss of the capital used. Numerical examples are for illustration.
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