Liquidation
Liquidation is when a venue force-closes a leveraged position because your account no longer holds enough margin to cover its losses. You can lose the margin you posted, and the closing price may be worse than the trigger price.
When it triggers
Hyperliquid's documentation says a liquidation occurs when a trader's account equity falls below the maintenance margin. It states that liquidations use the mark price, which combines external exchange prices with the venue's own book, so the trigger can differ from the price you see on the chart.
How the close works
On Hyperliquid, positions are first closed by market orders sent to the book. If that fails and equity falls below two thirds of the maintenance margin, a liquidator vault takes the position over in a backstop liquidation. The docs say the maintenance margin is not returned to the user after a backstop liquidation. Other venues have their own rules and penalties, so read each one.
How traders reduce the risk
Lower leverage widens the distance between your entry and your liquidation price. Isolated margin limits what a single position can lose, while cross margin shares the whole account balance across positions. Hyperliquid's docs give the formula for liquidation price and separate cross and isolated calculations. Check the number the venue displays before you confirm.
Liquidations can cluster when the price moves fast. Nothing here is advice to use leverage at all.
Common mistakes
Treating the displayed liquidation price as exact is risky, because mark price, fees and funding can move it. Another mistake is adding margin only after the price is already close. Panic additions during a fast move can be expensive and can fail if the network is congested.
Review your exposure before major news events. A position that is comfortable at normal volatility can be fragile during a spike.
Where this shows up
- Hyperliquid — Perps traders outside the US who want onchain order-book trading from their own wallet, with fees that drop by volume and HYPE staking.
- dYdX — Non-US, non-UK, non-Canadian traders who want an open-source, order-book perps venue with volume-tiered fees.
- GMX — Traders who want oracle-priced perps on Arbitrum or Avalanche, including gold, oil and US index markets, without an order book.
- Drift — Former Drift users and Solana perps traders evaluating Velocity, the post-exploit relaunch of Drift.
- Jupiter Perps — Solana users already on Jupiter who want high-leverage SOL, ETH or BTC perps against the JLP pool.
- Aster — Non-US, non-UK traders who want zero maker fees on order-book perps, very high leverage modes, or privacy-shielded orders.
Sources
Last checked . Fees and terms change often; the venue's own page wins if it disagrees with ours.
- Liquidations (Hyperliquid docs) — checked 2026-10-17