What liquidation means on a perpetual

A venue liquidates a perpetual when the collateral left on the position falls below the maintenance margin. That collateral is marked with the contract's mark price, not with the last trade. The last print can still look safe while the mark has already crossed the close price.

Mark price, not last price

Binance's liquidation protocols, updated 4 January 2026, split the two prices. Last price is the latest transaction in the contract's trade history. Binance uses it for realized profit and loss. Mark price is built from funding data and a basket of spot prices. Binance uses the mark for liquidation prices and for unrealized profit and loss.

The same page writes the trigger as:

collateral = initial collateral + realized PnL + unrealized PnL

Close when collateral < maintenance margin

Unrealized PnL in that sum is the mark-price result. A last trade that has not printed the same number does not keep the position open.

What leverage means in trading is the deposit-versus-size page. Liquidation is what the venue does when that deposit, after the mark move, no longer covers maintenance.

One deposit, two marks

These figures are a worked example, not a recorded run. Initial collateral is 100. Maintenance is 40. Realized PnL is 0. Only the unrealized mark result changes.

The panel shows 50 beside 30, with the same maintenance floor of 40. The close is the second case. It is not a choice the strategy graph made.

Binance also says liquidation occurs when the mark hits the position's liquidation price, and that a fast mark move can print a worse close than the liquidation price shown beforehand. Their example is a short whose calculated liquidation was 17,006 while the mark jumped from 17,000 to 17,100. The history tab then shows 17,100. Do not treat the first printed liquidation price as a guaranteed fill.

Maintenance itself is a function of position size at the venue, not of the leverage button you clicked. A larger notional can require a higher maintenance rate.

What Tradee does not close

Tradee does not borrow, post margin, or send the position to an exchange. A modeled loss is the price move times the modeled quantity. It is not a margin call, and it is not this liquidation. Someone who later routes those modeled transitions through a receiver and then chooses leverage at a venue is outside the modeled book.

Paper fills in Tradee also skip venue fees. What fees do to a backtest is the commission page. Who pays perpetual funding is the payment between longs and shorts. Neither payment is a liquidation, and a backtest that omits them is still not running a venue risk engine.

If the next job is choosing a quantity, start from an accepted dollar loss and a stop distance. That is size the loss before the trade, not a search for a liquidation price.