What Is Liquidation?
The forced closure of a leveraged position when your margin can no longer cover the losses. The exchange closes the trade at the liquidation price to protect itself from negative balances. Higher leverage means the liquidation price sits closer to your entry.
Related Terms
- Margin The collateral you post to open and maintain a leveraged position.
- Leverage Borrowed buying power that lets you control a position larger than your capital.
- Maintenance Margin The minimum equity a position must hold to stay open, expressed as a percentage of position value.
Where You Will Meet This Term
You will run into liquidation constantly on any futures exchange, from the order panel to the position dashboard. If you are still building your foundation, our guides on leverage, liquidation and risk management connect the vocabulary into an actual trading process, and the full glossary covers every other term you will encounter.