How Is the Bankruptcy Price Calculated for a Long Position? ▴ Learn

How Is the Bankruptcy Price Calculated for a Long Position?

For a long position, the bankruptcy price is calculated by subtracting the initial margin from the entry price and then adjusting for any fees and funding payments. The formula essentially determines the price at which the loss equals the initial margin.

Once the market price drops to this level, the trader's equity is zero.

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