High market volatility, which is typical in the cryptocurrency space, increases the risk of liquidation. A 10% drop in price, for example, wipes out a $1,000 margin with 10x leverage, leading to liquidation. Stop-loss orders and reduced leverage (2x–3x) enable traders to tolerate volatility and prevent abrupt position closures.
How does market volatility affect liquidation risk? Print
Created by: Himanshu Dwivedi
Modified on: Thu, 29 May, 2025 at 5:10 PM
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