English
RussianWhat Is a Liquidation in Crypto Trading?
A liquidation is the forced close of a leveraged position when its margin can no longer cover the loss.
Every leveraged position has a liquidation price. When the market reaches it, the exchange closes the position at market and the trader loses the margin.
Liquidations hurt more than the trader: forced buying and selling pushes price further and hits the next positions. That is how a liquidation cascade starts.
The levels where other traders' liquidations cluster show up on a liquidation map. Price is often drawn to them because big players profit from triggering them.
See it on In-Crypto
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Frequently asked questions
How do I avoid liquidation?
Use lower leverage, set a stop-loss before the liquidation price and never keep all the margin in one position.
What is a partial liquidation?
Some exchanges close part of the position first to bring it back to a safe level instead of closing it all at once.