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Liquidation and a stop loss are different mechanisms. A liquidation process starts under the platform's margin rules. A stop loss is a conditional order you choose. Having a stop order does not give it priority over liquidation or guarantee the price at which a position closes.
This guide uses Kraken Derivatives' support documentation for a concrete comparison. Its Equity Protection Process page explicitly excludes Kraken Derivatives US. Do not transfer this explanation to that separate product, spot-margin borrowing or another venue. The worked account below is invented, not Kraken's margin formula or a trading recommendation.
Separate the margin test from the order trigger
Kraken's Liquidation FAQ connects liquidation to the relevant maintenance-margin requirement and describes the displayed liquidation price as a changing estimate. Its Equity Protection Process describes a system-initiated attempt to close a position. That is different from waiting for a user-selected stop condition. Liquidation FAQ · Equity Protection Process
| Question | Liquidation process | Stop-loss order |
|---|---|---|
| Who sets the mechanism in motion? | The platform's risk process under its margin rules | An order chosen by the user, activated by its stated condition |
| What is being tested? | The applicable margin condition, using the relevant account valuation | The selected trigger reference against the order's stop price |
| What follows? | The documented liquidation process; an initial close attempt need not fill everything | A market or limit order, depending on the stop type, subject to execution conditions |
| What does the number not promise? | A displayed estimate is not a fixed future execution price | A stop price is not a guaranteed fill or a maximum-loss amount |
The distinction matters even when both screens show a similar price. Before comparing the numbers, identify what each number measures and which process uses it.
A chart price may not be the trigger reference
The last price records the most recent executed trade in the contract. The mark price is a valuation reference; the two can differ. Kraken's price-reference explainer specifically warns that mark-based liquidation can happen before a stop using the last price triggers. Last price and mark price
The derivatives TP/SL documentation lists mark, index and last price as possible trigger references. A stop labelled “95” is therefore incomplete information: you also need to know which reference must reach 95. Derivatives TP/SL trigger references
No choice of reference makes execution certain. A trigger reference determines when a condition is met; it is not itself a promise of an available buyer, seller or fill price.
A fictional account: the stop stays untriggered
Consider one invented long unit. Its entry price is 100 currency units per unit, abbreviated CU/unit. The teaching account starts with 10 CU of collateral. For this example only, define its equity as:
Equity in CU = 10 CU + 1 unit × (mark price − 100 CU/unit).
Stipulate a constant maintenance requirement of 5 CU. The fictional liquidation condition is strictly equity < 5 CU. A separate sell stop uses the last price, with a trigger condition of last price ≤ 95 CU/unit. Assume the order remains open and no earlier last-price observation has met that stop condition.
There are no other positions, fees, funding payments, deposits, withdrawals or collateral-price changes in this toy. These assumptions supply a complete arithmetic example; they are not real contract specifications, a recommended stop distance or a liquidation-price calculator.
| Fictional snapshot | Last price (CU/unit) | Mark price (CU/unit) | Equity calculation (CU) | Margin test | Last-price stop test |
|---|---|---|---|---|---|
| T0 | 96 | 96 | 10 + (96 − 100) = 6 | 6 ≥ 5: no breach | 96 > 95: not triggered |
| Boundary observation | 96 | 95 | 10 + (95 − 100) = 5 | 5 = 5: no breach under the stipulated strict test | 96 > 95: not triggered |
| T1 | 96 | 94 | 10 + (94 − 100) = 4 | 4 < 5: liquidation condition met | 96 > 95: still not triggered |
The last price has stayed at 96, so it has not reached the stop's 95 threshold. The mark has moved, and the stipulated equity has fallen below the separate maintenance requirement. There is no contradiction: the two tests use different inputs.
At the boundary observation, the toy equity equals its requirement. The table deliberately shows the strict inequality we chose rather than silently changing “below” into “at or below.” A real account needs its own exact rules and changing inputs.
This example also does not show that a mark-price stop would necessarily finish first. Matching trigger references would remove this particular mismatch; it would not establish execution timing, liquidity or a complete fill.
Triggered does not mean fully closed
A stop-market order and a stop-limit order have different execution conditions. Kraken's derivatives order-types page describes a market order after the former trigger and a limit order after the latter. The limit sets an acceptable matching price, but the order may remain unfilled. Its stop-market documentation also lists price-protection and activation checks that can leave an order rejected, partly filled or unfilled. Derivatives order types
For example, “stop triggered” does not tell you how much of a position remains. Nor can you infer the realized currency loss from a trigger price alone. You would need the actual fills, contract payoff and applicable costs. This guide supplies none of those inputs for a live account.
Similarly, the start of liquidation does not mean that every contract closes in one market fill. Kraken's Equity Protection Process describes further steps when an initial close attempt cannot fully fill. The process depends on the product. That is why “the exchange sells everything immediately at the displayed liquidation price” is too strong a description here.
Keep this comparison separate from a risk–reward plan
A worksheet can use an entry and stop price to calculate a planned price distance. It cannot establish whether that stop will activate before another process or what the actual exit will be. The risk–reward guide explains that planning distinction using its own product-specific sources.
Likewise, dividing exposure by posted funds does not calculate a liquidation price. The futures margin and leverage guide separates those amount labels. Neither that CME-based explanation nor US stock-order education substitutes for the Kraken derivatives documentation used here.
Frequently asked questions
Is liquidation just an automatic stop loss?
No. One is the platform's margin process; the other is a conditional order selected by the user. They can depend on different references and have different execution paths.
Can liquidation start before my stop triggers?
Yes, the named price-reference explanation identifies that possibility when liquidation uses the mark and a stop uses the last price. In Figure 2, the last stays above 95 while the toy margin condition is breached. This illustrates a possible mismatch, not its frequency.
Does a stop-market order guarantee a fill at the stop price?
No. Activation and execution are separate. The documented order conditions, available liquidity and actual matches matter. Adding a limit-price condition changes which prices are acceptable; it does not guarantee a fill either.
Is a displayed liquidation price fixed?
Kraken's FAQ calls it an estimate that can change with account variables. It is not a permanent price boundary independent of the rest of the account. The fixed 5 CU requirement in our table is an invented teaching assumption.
Can I read the example as a maximum loss of 5 CU?
No. The 5 CU figure is the toy maintenance requirement. The stop threshold is 95 CU/unit. Neither is a demonstrated maximum realized loss. No execution, fees or final account outcome has been calculated.
Explore HypaForecast pages
Browse the publisher’s market list and BTC 5-minute and 15-minute pages. These navigation links are separate from the derivatives examples in this guide.
Sources and scope
Relevant text was checked on October 20, 2026. The named Kraken support pages display updates of October 1, 2026 for derivatives order types; March 17, 2026 for the Liquidation FAQ; July 28, 2026 for the Equity Protection Process; and August 9, 2025 for derivatives TP/SL. The price-reference explainer is used for the last/mark distinction, not a universal mark-price formula or an execution guarantee.
Both tables are original teaching layouts. Figure 2's prices, equity formula, requirement and observations are fictional. This guide makes no claim about current fees, legal eligibility, available instruments or the treatment of every margin mode or venue.
HypaForecast publishes educational guides and operates a prediction market. This guide does not establish HypaForecast derivatives, margin, stop-order or liquidation features, available markets, your eligibility or a trading opportunity.
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