What happens when the liquidation threshold is reached in a cryptocurrency trade?

3 answers

• Dec 16, 2021 · 3 years ago
  When the liquidation threshold is reached in a cryptocurrency trade, it means that the trader's position is at risk of being liquidated. This happens when the trader's margin falls below a certain level set by the exchange. When this occurs, the exchange will automatically close the trader's position to prevent further losses. The trader will lose their entire margin and any unrealized profits or losses. It is important for traders to monitor their margin levels closely to avoid liquidation.
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• Dec 16, 2021 · 3 years ago
  Liquidation threshold in cryptocurrency trading is the point where a trader's position is automatically closed by the exchange due to insufficient margin. When this happens, the trader's assets are sold off to cover the losses. It is a risk management mechanism implemented by exchanges to protect themselves and traders from excessive losses. Traders should always be aware of their margin levels and set appropriate stop-loss orders to avoid reaching the liquidation threshold.
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• Dec 16, 2021 · 3 years ago
  When the liquidation threshold is reached in a cryptocurrency trade, the exchange will close the trader's position to prevent further losses. This is done automatically by the exchange's system. The trader will lose their margin and any unrealized profits or losses. It is important for traders to understand the liquidation threshold and manage their positions accordingly. By setting appropriate stop-loss orders and monitoring margin levels, traders can minimize the risk of reaching the liquidation threshold.
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