How to Calculate the Bankruptcy Price for KuCoin Contracts

What is a bankruptcy price?       

In futures trading, there can be situations where your profits and losses fluctuate. The bankruptcy price corresponds to the situation where your position margin reaches zero. When the price of your position reaches the bankruptcy price, KuCoin takes over and liquidates your position. However, KuCoin cannot guarantee that the position will be taken over at the liquidation price. Instead, KuCoin will take over the position at the bankruptcy price. If the takeover price is better than the bankruptcy price, any excess amount goes into the insurance fund. If the takeover price is worse than the bankruptcy price, the insurance fund covers the missing amount. KuCoin does not make any profit from this situation.

How do I calculate the bankruptcy price for KuCoin futures?

To calculate the bankruptcy price for USDT-margined contracts under the isolated margin mode, the formula is as follows:

Long Position: BP = (HP * Vol * S - IM) / (Vol * S)

Short Position: BP = (HP * Vol * S + IM) / (Vol * S)

Description:

BP	Estimated bankruptcy price
HP	Holdings price (average price)
Vol	Holding volume (lot)
S	Contract multiplier, which can be found in Contract Details
IM	Initial Margin, which is related to the leverage multiple selected when opening a position IM = HP * Vol * S / Lev (Lev is the leverage ratio)

For example, if you open a short position of 5 BTC/USD contracts with a leverage of 100x, where each contract has a multiplier of 0.001 BTC and a value of 28,000, the corresponding parameters would be:

HP: 28,000, Vol: 5, S: 0.001, IM: 5 * 28000 * 0.001 / 100 = 1.4

By substituting these parameters, we can calculate the bankruptcy price: BP = (28,000 * 5 * 0.001 + 1.4) / ( 5 * 0.001) = 28,280

To calculate the bankruptcy price for coin-margined contracts under the isolated margin mode, the formula is as follows:

Long Position: BP = Vol / (1/HP * Vol + IM)

Short Position: BP = Vol / (1/HP * Vol - IM)

Description:

BP	Estimated bankruptcy price
HP	Holdings price (average price)
Vol	Holding volume (lot)
IM	Initial Margin, which is related to the leverage multiple selected when opening a position IM = 1/HP * Vol / Lev (Lev is the leverage ratio)

For example, if you open a long position of 10,000 BTC contracts with a leverage of 50x when the BTC price is 25,000, the corresponding parameters would be:

HP: 25,000, Vol: 10,000, IM: 1 / 25,000 * 10,000 / 50 = 0.008

By substituting these parameters, we can calculate the bankruptcy price: BP = 10,000 / (1 / 25,000 * 10,000 + 0.008) = 24,510