Can a spot trade be liquidated?

No. When you buy spot with your own money you have borrowed nothing, so there is no liquidation price: the asset can lose value, but nobody closes the position for you. Liquidation only exists when borrowed money is involved, as in margin or leveraged contracts.

What is the difference between a liquidation price and a stop loss?

A stop loss is a level you choose for leaving the trade when the idea is wrong, and the loss there is one you set in advance. A liquidation price is the level where the exchange closes the position because the margin no longer covers it, and there you lose nearly all the margin behind the trade.

Is adding margin a good way to avoid liquidation?

It pushes the liquidation price further away, but it also raises the money at risk in a trade that is already going wrong. It is much like moving a stop loss further out: the maximum loss becomes larger than the one you accepted at entry.

Does Nendojo simulate liquidation?

No. Nendojo is a replay tool with simulated orders: it sizes each trade from its stop loss and shows the leverage of each order, but it does not simulate an exchange liquidating a position. You estimate the liquidation price yourself, the way this article describes.

What Is Liquidation in Crypto? Estimating the Price

You open a leveraged long. Price drops a few percent, then turns and climbs back, exactly as you expected. But your position is no longer there: it was closed near the low, and most of the margin behind it is gone. You were right about direction and still lost money. What happened is called liquidation, and it depends on how large the position was far more than on whether you read the market correctly.

What liquidation is

In a leveraged trade you put up only part of the position’s value. That part is the margin. The rest is borrowed from the exchange. Profit and loss are calculated on the whole position, but they are added to or taken from your margin.

Liquidation is the exchange closing your position automatically once losses have eaten nearly all of that margin. The exchange does this to recover what it lent before the loss reaches its own money. The price at which this happens is the liquidation price.

Three things to keep in mind:

Liquidation is not an order you place. It happens whether or not you are watching the screen.
After liquidation the position is gone. If price turns straight afterwards, you get none of the recovery.
A spot trade made with your own money has no liquidation price, because there is no loan.

For the wider meaning of the word in finance, see the Investopedia entry.

How to estimate a liquidation price

Every exchange has its own formula, with its own maintenance margin and fees. One piece of mental arithmetic is enough to understand the mechanism, though: at N times leverage, price only has to move about one Nth against you before the margin is used up.

The figures below are made up to show the arithmetic and come from no market. Assume a long entered at 100.

Leverage	Margin per 100 of position	Adverse move of about	Estimated liquidation price
2x	50	50%	50
5x	20	20%	80
10x	10	10%	90
20x	5	5%	95
50x	2	2%	98

This estimate is on the optimistic side. In practice an exchange liquidates a little earlier, because it keeps part of the margin as a buffer and charges fees. Read the last column as “here at the latest”, not “exactly here”.

The table makes one point: the higher the leverage, the narrower the range of prices a position can survive. In the last row of the example, a two percent move is enough to end the trade.

A real stretch of market

Now set that arithmetic next to real candles. The numbers in this section come from Binance spot candles for ETHUSDT on the 15-minute timeframe, in UTC: 64 candles from 12:00 on 8 October 2026 to 04:00 on 9 October 2026.

The window opens at 2,537.42. Its high, 2,542.39, is in the 13:15 candle. Its low, 2,406.11, is in the 17:15 candle the same day. From high to low, price fell 5.36% in four hours.

The largest candle is the one at 15:15: it opened at 2,509.27 and closed at 2,465.6, down 1.74% in 15 minutes, with a low of 2,455.58.

After the low, price recovered gradually. The last candle of the window closed at 2,493.69, only 1.72% below the open of the first.

Those two figures, 5.36% and 1.72%, are the whole lesson. Picture a long opened right at the high of this window with a liquidation price less than 5.36% below the entry: price passed through that level on the way down, so the position no longer existed when price recovered. A long in the same direction, from the same entry, but with a liquidation price below the low, was still open at the end of the window. The difference between the two is not the view of the market. It is the size.

This article does not discuss why price fell in those hours, and does not treat this window as a pattern for what happens next time.

The common mistake: choosing leverage first, risk second

The order that is easiest to fall into goes like this: pick a familiar leverage, commit part of the account as margin, and only then think about where to get out. The liquidation price then becomes the trade’s real stop loss, and the loss at that level is nearly the whole margin.

The sound order is the reverse. The figures below are again an invented example.

Decide the risk of the trade. A 10,000 USD account, risking 1% per trade. So 1R is 100 USD.
Put the stop loss where the idea is wrong. Entry 100, stop loss 98. Risk per unit is 2.
Divide to get the size. 100 ÷ 2 = 50 units, a position worth 5,000 USD.
Only now look at leverage. A 5,000 USD position on a 10,000 USD account is 0.5x. This trade needs no borrowing at all.

Now pull the stop closer: entry 100, stop loss 99.5. Risk per unit is 0.5, size is 200 units, and the position is worth 20,000 USD, or 2x the account. By the table above, the estimated liquidation price sits about 50% from the entry, while the stop is 0.5% away. The stop is reached long before, and the loss is still 100 USD.

This is not a suggestion to use leverage. The example is there to show one thing: when size is worked out from risk and stop loss, leverage is the output of a division, not something you choose. And the check is short: the stop loss must come before the liquidation price, with room to spare. If the liquidation price is nearer than the stop, the position is too large for the margin behind it.

A related mistake is adding margin as price approaches the liquidation level. That moves the liquidation price away, but it also raises the stake on a trade that is going wrong. In substance it is the same as moving a stop: you are changing the maximum loss after entry, in the direction of losing more.

Three questions before any leveraged trade

Before opening a position that uses borrowed money, be able to answer three questions:

If price reaches my stop loss, how much money do I lose, and is that the 1R I decided on?
Where is the estimated liquidation price of this position, and how many times further away than the stop is it?
In recent days, has price often travelled a distance equal to the gap to my liquidation price within a few hours?

If you cannot answer the second one, you do not yet know where the trade ends in the worst case.

Drill on the replay

Nendojo does not simulate liquidation, but it shows the value and leverage of each order as soon as you choose a stop loss. That is enough to practise the estimate. Press the “open this replay” button at the end of the article, then follow these steps.

Step through one candle at a time with the right arrow key. Do not use autoplay.
Enter with a stop loss. Press B to buy or S to sell, then click the chart where the stop goes. The app works out the size from the risk you have set.
Read the order’s leverage in the order panel before confirming. Write the figure in your notes.
Estimate the liquidation price with the one-Nth rule and write it next to the stop loss. If the order’s leverage is below one, write “no liquidation price”.
Compare the two levels. Does the stop come before the liquidation price? By how many times?
Repeat on paper with a different scenario: suppose you had entered at the same point but picked the leverage first, out of habit. Where is the liquidation price of that imagined trade? Step forward and mark whether price reaches it.
Finish the window, open the statistics with F, and count: how many real trades ended at the stop with exactly −1R, and how many imagined trades on paper were liquidated before price turned?

The result of the drill is not a number of winning trades. It is a habit: never open a position without knowing two prices, the one where you leave by choice and the one where you are forced out, and which of them comes first.