MAEXO

Liquidation

Glossary

Trading

Liquidation

Forced closure of a leveraged position when collateral runs out.

Definition

In depth

Liquidation happens when a leveraged trader's losses eat through their margin. The exchange or protocol closes the position automatically to prevent further loss, often charging a liquidation fee on top.

Related

Related terms

Leverage

Borrowing capital to amplify position size, magnifying both gains and losses.

Futures

Derivative contracts to buy or sell crypto at a future date and price.

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