diff --git a/freqtrade/enums/exittype.py b/freqtrade/enums/exittype.py
index b2c5b62ea..1e15e70cd 100644
--- a/freqtrade/enums/exittype.py
+++ b/freqtrade/enums/exittype.py
@@ -9,6 +9,7 @@ class ExitType(Enum):
     STOP_LOSS = "stop_loss"
     STOPLOSS_ON_EXCHANGE = "stoploss_on_exchange"
     TRAILING_STOP_LOSS = "trailing_stop_loss"
+    LIQUIDATION = "liquidation"
     EXIT_SIGNAL = "exit_signal"
     FORCE_EXIT = "force_exit"
     EMERGENCY_EXIT = "emergency_exit"
diff --git a/freqtrade/optimize/backtesting.py b/freqtrade/optimize/backtesting.py
index 4d16dc0f1..598ce6710 100755
--- a/freqtrade/optimize/backtesting.py
+++ b/freqtrade/optimize/backtesting.py
@@ -381,7 +381,8 @@ class Backtesting:
         Get close rate for backtesting result
         """
         # Special handling if high or low hit STOP_LOSS or ROI
-        if exit.exit_type in (ExitType.STOP_LOSS, ExitType.TRAILING_STOP_LOSS):
+        if exit.exit_type in (
+                ExitType.STOP_LOSS, ExitType.TRAILING_STOP_LOSS, ExitType.LIQUIDATION):
             return self._get_close_rate_for_stoploss(row, trade, exit, trade_dur)
         elif exit.exit_type == (ExitType.ROI):
             return self._get_close_rate_for_roi(row, trade, exit, trade_dur)
@@ -396,11 +397,16 @@ class Backtesting:
         is_short = trade.is_short or False
         leverage = trade.leverage or 1.0
         side_1 = -1 if is_short else 1
+        if exit.exit_type == ExitType.LIQUIDATION and trade.liquidation_price:
+            stoploss_value = trade.liquidation_price
+        else:
+            stoploss_value = trade.stop_loss
+
         if is_short:
-            if trade.stop_loss < row[LOW_IDX]:
+            if stoploss_value < row[LOW_IDX]:
                 return row[OPEN_IDX]
         else:
-            if trade.stop_loss > row[HIGH_IDX]:
+            if stoploss_value > row[HIGH_IDX]:
                 return row[OPEN_IDX]
 
         # Special case: trailing triggers within same candle as trade opened. Assume most
@@ -433,7 +439,7 @@ class Backtesting:
                 return max(row[LOW_IDX], stop_rate)
 
         # Set close_rate to stoploss
-        return trade.stop_loss
+        return stoploss_value
 
     def _get_close_rate_for_roi(self, row: Tuple, trade: LocalTrade, exit: ExitCheckTuple,
                                 trade_dur: int) -> float:
diff --git a/freqtrade/persistence/trade_model.py b/freqtrade/persistence/trade_model.py
index 5f302de71..2ff65d9d0 100644
--- a/freqtrade/persistence/trade_model.py
+++ b/freqtrade/persistence/trade_model.py
@@ -511,17 +511,9 @@ class LocalTrade():
         Method you should use to set self.stop_loss.
         Assures stop_loss is not passed the liquidation price
         """
-        if self.liquidation_price is not None:
-            if self.is_short:
-                sl = min(stop_loss, self.liquidation_price)
-            else:
-                sl = max(stop_loss, self.liquidation_price)
-        else:
-            sl = stop_loss
-
         if not self.stop_loss:
-            self.initial_stop_loss = sl
-        self.stop_loss = sl
+            self.initial_stop_loss = stop_loss
+        self.stop_loss = stop_loss
 
         self.stop_loss_pct = -1 * abs(percent)
         self.stoploss_last_update = datetime.utcnow()
diff --git a/freqtrade/plugins/protections/stoploss_guard.py b/freqtrade/plugins/protections/stoploss_guard.py
index abc90a685..e80d13e9d 100644
--- a/freqtrade/plugins/protections/stoploss_guard.py
+++ b/freqtrade/plugins/protections/stoploss_guard.py
@@ -49,7 +49,7 @@ class StoplossGuard(IProtection):
         trades1 = Trade.get_trades_proxy(pair=pair, is_open=False, close_date=look_back_until)
         trades = [trade for trade in trades1 if (str(trade.exit_reason) in (
             ExitType.TRAILING_STOP_LOSS.value, ExitType.STOP_LOSS.value,
-            ExitType.STOPLOSS_ON_EXCHANGE.value)
+            ExitType.STOPLOSS_ON_EXCHANGE.value, ExitType.LIQUIDATION.value)
             and trade.close_profit and trade.close_profit < self._profit_limit)]
 
         if self._only_per_side:
diff --git a/freqtrade/strategy/interface.py b/freqtrade/strategy/interface.py
index c60817c99..f50721583 100644
--- a/freqtrade/strategy/interface.py
+++ b/freqtrade/strategy/interface.py
@@ -963,7 +963,7 @@ class IStrategy(ABC, HyperStrategyMixin):
         # ROI
         # Trailing stoploss
 
-        if stoplossflag.exit_type == ExitType.STOP_LOSS:
+        if stoplossflag.exit_type in (ExitType.STOP_LOSS, ExitType.LIQUIDATION):
 
             logger.debug(f"{trade.pair} - Stoploss hit. exit_type={stoplossflag.exit_type}")
             exits.append(stoplossflag)
@@ -1035,6 +1035,17 @@ class IStrategy(ABC, HyperStrategyMixin):
 
         sl_higher_long = (trade.stop_loss >= (low or current_rate) and not trade.is_short)
         sl_lower_short = (trade.stop_loss <= (high or current_rate) and trade.is_short)
+        liq_higher_long = (trade.liquidation_price
+                           and trade.liquidation_price >= (low or current_rate)
+                           and not trade.is_short)
+        liq_lower_short = (trade.liquidation_price
+                           and trade.liquidation_price <= (high or current_rate)
+                           and trade.is_short)
+
+        if (liq_higher_long or liq_lower_short):
+            logger.debug(f"{trade.pair} - Liquidation price hit. exit_type=ExitType.LIQUIDATION")
+            return ExitCheckTuple(exit_type=ExitType.LIQUIDATION)
+
         # evaluate if the stoploss was hit if stoploss is not on exchange
         # in Dry-Run, this handles stoploss logic as well, as the logic will not be different to
         # regular stoploss handling.