When does liquidation happen?
Your position gets liquidated when your Margin Ratio drops below the Maintenance Margin requirement:- At 40x leverage, your maintenance margin is 1.25%.
- That means if your remaining equity (collateral plus unrealized PnL minus owed funding) drops to 1.25% of your position’s total value, your position is liquidated.
Protection against wick liquidations
On volatile meme coins, sudden flash wicks on one exchange or pool can wipe people out unfairly. Priest.trade uses a dual-price check to stop this:- Your position is only liquidated if your margin ratio is breached at both the mark price AND the index price (the smoothed moving average).
- If someone pumps or dumps the price for a single block, the smoothed index barely moves, and the liquidation transaction reverts. You stay in your trade.
What happens during a liquidation
When a position is liquidated:- The position is closed at the market price through the curve or secondary engine.
- Any remaining equity is split:
- A trading fee is deducted.
- A small reward goes to the keeper bot that executed the liquidation.
- A penalty goes to the market’s insurance fund.
- Whatever is left over goes back to your wallet.
- If the position closed with negative equity (a gap down past zero), the market’s insurance fund absorbs the loss.
How to avoid getting liquidated
- Use Stop Losses: Set an automatic stop loss on your trade so you exit before reaching maintenance margin.
- Add Margin: If a trade is moving against you, click the
+icon next to your position to add more USDC collateral. This moves your liquidation price farther away. - Trade with Lower Leverage: High leverage leaves almost no room for error. A 10x position gives you a ~9% buffer, while 40x gives you only ~1.25%.
See also
- Leverage & Margin — how margin requirements are calculated.
- Take Profit & Stop Loss — setting automated exits.
- Insurance Fund — what covers bad debt.