JoymistaWhat Is Liquidation in Crypto Futures?
Liquidation is the exchange force-closing your leveraged trade when the margin can no longer cover the loss, so you lose all or most of the margin behind it.
Explained
The higher the leverage, the closer the liquidation price is to your entry. Roughly, on an isolated 10x long a 10% loss wipes out the margin, but exchanges liquidate a little before that because of maintenance margin and fees. Big waves of liquidations can speed up price moves.
Example
Example with made-up numbersA long at 100 with 10x isolated leverage. A 10% loss wipes the margin at about 90, so the actual liquidation sits a little above 90.
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Open in JoymistaEducational content, not investment advice.