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When liquidation starts
Liquidation is a comparison of two numbers, described in the margin and leverage guide. The Perps guide shows where it sits in the whole picture. The exchange divides your equity by your maintenance margin and calls the result the margin ratio: Equity / MaintenanceMargin. Liquidation starts when equity falls below maintenance margin, which is the same as a margin ratio below one.
Equity is your collateral plus unrealized profit and loss, minus the fees and the funding you owe, with each position valued at the mark price. Polymarket keeps the prices that record trades apart from the calculated prices that judge risk, because one small or isolated trade should not be able to change an account's risk state or trigger liquidation by itself. In the mark price the last trade is only one input of one of the three candidates. The mark price guide explains how it is built.
Cross and isolated positions are checked separately. A cross check uses the account's combined cross equity and combined maintenance margin. An isolated position is checked on its own equity and its own maintenance margin.
What happens while you are being liquidated
The affected part of your account is flagged. While the flag is set, new orders are blocked and resting orders are cancelled, and fills carry an extra fee (see below).
- New orders are blocked. A cross liquidation blocks new orders on every market of the account. An isolated liquidation blocks new orders only on the affected market.
- Resting orders are cancelled. Your resting orders in the flagged scope are cancelled before the first liquidation order is placed. Cancels race the market, so a resting order can still trade in the instant before its cancel lands.
Any fill in that scope is marked as a liquidation fill in your history.
How the position is closed
The exchange closes flagged positions with reduce-only immediate-or-cancel orders. They execute at once against whatever liquidity is resting on the book and cancel what is left. They are market priced, with no protective spread off the mark price, so the price you are closed at can be worse than the price that triggered the liquidation, especially when the book is thin.
- A cross liquidation works one position at a time. After each fill the exchange checks your margin again and picks the next position, so the unwinding can take several steps.
- An isolated liquidation targets only the flagged position.
If the closing fills restore your margin, the process stops. The flag clears when equity recovers to the recovery initial margin or the position is closed. The pages used for this guide do not define the recovery initial margin or say how it is set.
How much one closing order takes is worded in two ways. The mechanics page says an isolated liquidation closes the flagged position in full, and it also says that partial fills that restore the account naturally stop the process. A Sep 21, 2026 changelog entry on liquidations after an outage says an in-progress liquidation resumes with normal partial clips instead of a full-size close. The documentation therefore does not settle whether a position is closed in one order or in several.
The insurance fund
Sometimes the loss is already so deep that closing the position on the order book is unlikely to recover its value. In that case the exchange skips the book and moves the position into the insurance fund. This happens when equity falls below two-thirds of maintenance margin. For an isolated position the fund takes the position and its isolated margin. For a cross position it takes all of your cross positions and your balance of the quote asset, which is pUSD.
The fund steps in only if it stays healthy after taking the position. When it cannot, the exchange uses auto-deleveraging instead.
Auto-deleveraging
Auto-deleveraging, or ADL, closes the position directly against traders on the opposite side, with no order book and no draw on the insurance fund. The traders it picks first are the most profitable and the most leveraged. The ranking is AdlIndex = ProfitRatio * Notional / Equity, where the profit ratio is mark over entry for longs and entry over mark for shorts. A counterparty position is only ever reduced, never flipped to the other side or increased.
An isolated liquidation deleverages at the bankruptcy price of the liquidated position, the price at which the isolated margin is exactly used up. A cross liquidation uses the mark price from the moment the liquidation began, not the live mark. These fills carry no fee for either side. If you are the counterparty, you receive a notification with the size closed, the price and your realized profit or loss.
The extra fee
While your account is flagged, every fill pays a liquidation fee on top of the ordinary maker or taker rate: Notional × (MakerOrTakerRate + LiquidationFeeRate). Auto-deleveraging fills are the exception, because they carry no fee. In the public instrument list the liquidation fee rate is 0.5% for the markets listed on Oct 19, 2026.
How to read your distance to liquidation
Polymarket does not publish a formula for the liquidation price. For cross positions its FAQ names only what the number depends on, and for isolated positions the documentation does not say how the exchange computes the figure it shows for your account. The numbers on this page are therefore a derived estimate, and the figure on your account can differ from it.
This site solves the published margin rules for the price at which equity equals the maintenance margin, under these assumptions: an isolated position, margin equal to the position value divided by your leverage, maintenance margin taken on the position value at the mark price, and no fees and no funding. Under them, a long is liquidated when the price falls to your entry times one minus the inverse of your leverage, divided by one minus the maintenance rate. For a short the formula mirrors it, with plus signs. The chart shows what the estimate means for a long position.
For a cross position the number is less stable, because it depends on the rest of the cross account. A move in another position, a change in size or a deposit can shift it for all cross positions at once.
What moves your distance to liquidation
Four things change the gap between your entry price and your liquidation price.
- Your leverage. Initial margin is the position value divided by your leverage, while the maintenance margin stays the same, so a lower leverage leaves a wider gap between the two.
- The market's maximum leverage. The maintenance rate is half of the inverse of the market maximum. At the same leverage, a market with a higher maximum has a lower rate and the position there is liquidated later; at each market's own maximum leverage, the market with the higher maximum is liquidated sooner.
- Fees. Fees you owe reduce your equity, which brings the liquidation price closer to the market.
- Funding. A funding payment you owe lowers your equity in the same way, and a payment you receive raises it.
On an isolated position, margin you add raises equity and moves the liquidation price away from the market, while margin you remove does the opposite. The exchange accepts a change only if the position's equity stays at or above the required initial margin, and it blocks changes while the account is in cross liquidation or that position is in isolated liquidation. When the line is crossed anyway, the exchange flags the account, blocks new orders in the scope, cancels the resting ones and closes the position, as described above.
FAQ
What triggers a liquidation?
Your equity falling below the maintenance margin. The check values positions at the mark price, runs continuously, and treats cross and isolated positions separately: an isolated position is judged on its own equity, while cross uses the combined equity and margin of all cross positions.
Why can the liquidation price of a cross position change by itself?
A cross position is backed by the whole cross account, so its liquidation price depends on the rest of that account. A price move in another cross position, a change in size or a change in collateral shifts the number for every cross position at once. An isolated position is backed only by its own margin, so its price is more stable.
When does the insurance fund take over a position?
When the loss is already too deep for the order book to recover. The Perps FAQ says this happens when equity falls below two-thirds of maintenance margin, and the fund acts only if it stays healthy after taking the position. If it cannot, auto-deleveraging closes the position against opposite-side traders.
Does a liquidation cost more than a normal close?
Yes. While your account is flagged, every fill pays a liquidation fee in addition to the usual maker or taker fee. Auto-deleveraging fills are the exception: they happen without the order book and cost neither side a fee.
Sources and checks
Every rule quoted in this article comes from the registry below. Each row names the official page and the day it was compared with the text.
All 25 rules used in this article
| Rule | Value | Official source | Checked |
|---|---|---|---|
| Margin ratio | Equity / MaintenanceMargin | docs.polymarket.com/ | |
| Liquidation starts when | equity falls below maintenance margin | docs.polymarket.com/ | |
| Why execution prices and calculated prices are kept apart | one small or isolated trade should not be able to change an account's risk state or trigger liquidation by itself | docs.polymarket.com/ | |
| Cross liquidation blocks | blocks new orders on every market of the account | docs.polymarket.com/ | |
| Isolated liquidation blocks | blocks new orders only on the affected market | docs.polymarket.com/ | |
| Resting orders at the start of a liquidation | are cancelled | docs.polymarket.com/ | |
| How a liquidation is executed | reduce-only immediate-or-cancel orders | docs.polymarket.com/ | |
| Liquidation order price | no protective spread off the mark price | docs.polymarket.com/ | |
| Cross liquidation order | one position at a time | docs.polymarket.com/ | |
| How a liquidation flag clears | when equity recovers to the recovery initial margin or the position is closed | docs.polymarket.com/ | |
| An isolated liquidation closes | the flagged position in full | docs.polymarket.com/ | |
| Partial fills can end a liquidation | partial fills that restore the account naturally stop the process | docs.polymarket.com/ | |
| Liquidations after an outage resume with partial clips | resumes with normal partial clips instead of a full-size close | docs.polymarket.com/ | |
| When the insurance fund steps in | when equity falls below two-thirds of maintenance margin | docs.polymarket.com/ | |
| When the insurance fund can step in | only if it stays healthy after taking the position | docs.polymarket.com/ | |
| Auto-deleveraging ranking | AdlIndex = ProfitRatio * Notional / Equity | docs.polymarket.com/ | |
| What auto-deleveraging does to a counterparty position | is only ever reduced, never flipped to the other side or increased | docs.polymarket.com/ | |
| Auto-deleveraging price for an isolated position | the bankruptcy price of the liquidated position | docs.polymarket.com/ | |
| Fees on auto-deleveraging fills | carry no fee for either side | docs.polymarket.com/ | |
| Fee on a liquidation fill | Notional × (MakerOrTakerRate + LiquidationFeeRate) | docs.polymarket.com/ | |
| Liquidation fee rate in the instrument list | 0.5% | api.perpetuals.polymarket.com/ | |
| Why a cross liquidation price can move | it depends on the rest of the cross account | docs.polymarket.com/ | |
| When an isolated margin change is accepted | only if the position's equity stays at or above the required initial margin | docs.polymarket.com/ | |
| When margin changes on an isolated position are blocked | while the account is in cross liquidation or that position is in isolated liquidation | docs.polymarket.com/ | |
| Maintenance margin rate | 0.5 / MaxLeverage | docs.polymarket.com/ |
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PolyTerminal is an independent interface for Polymarket and is not operated or endorsed by Polymarket. Orders placed through PolyTerminal carry PolyTerminal’s Polymarket builder code, and PolyTerminal may charge a builder fee on top of Polymarket’s own fees. This page is educational and is not investment advice. Rules were compared with the official documentation on Oct 19, 2026; check the source before you act on a number.