When you trade crypto with leverage in the Futures Market, you get the opportunity to amplify your gains, but with that also comes the risk of amplified losses. To protect traders from losing more than their investment and to safeguard the platform’s liquidity, SunCrypto applies the isolated margin order. As part of this process, a liquidation/Clearance fee may be charged.
In this article, we'll explain what liquidation means, how liquidation fees work on SunCrypto, and how they're calculated — with an easy-to-understand example.
What is Liquidation?
In simple terms, liquidation happens when the value of your open leveraged position drops so much that your initial margin (the money you invested) is no longer enough to keep it open. When this happens, the system automatically closes your position to prevent you from incurring further losses as part of the isolated margin orders.
This is done to protect you and the platform from scenarios where your losses exceed your available funds.
What is a Liquidation/Clearance Fee?
A liquidation fee is a small charge applied when your futures position is forcibly closed due to market movements going against your prediction. It’s not a fixed fee — rather, it’s the difference between your liquidation price and the actual price at which your position was sold on the market.
This fee exists because crypto markets are highly volatile, and at the time of liquidation, the system may not always find a buyer at your exact liquidation price. We try to execute your position at the best available market price close to your liquidation point to minimize losses.
Example: Let’s say you have ₹1,000 in your SunCrypto Futures Wallet.
You decide to go long (buy) on XRP using 10x leverage, which means you’re trading with ₹10,000 worth of XRP.
Entry Price: ₹0.50
Target Price: ₹0.90
Liquidation Price: ₹0.10
Now, if the market moves against your position and the price of XRP starts dropping, your position will automatically liquidate when it hits the liquidation threshold. However, it's possible that when XRP hits ₹0.10, there aren't enough buyers at that exact price as the market is dropping instantly.
To reduce your losses and protect your margin, SunCrypto's system will try to sell your position very close to the liquidation price. Suppose we find a buyer at ₹0.09 — the order is executed at that price.
The gap between the liquidation price (₹0.10) and the executed price (₹0.09) is where the liquidation/Clearance fee comes in. This fee will be deducted from your wallet, and the clearance/liquidation fee that will be deducted will be shown in the history of your order.
At SunCrypto, we don’t charge a fixed percentage as a liquidation/Clearance fee like many other platforms. Instead, we follow a fair execution model. We believe this method is more trader-friendly as it aims to limit your losses and offer best execution practices.
Conclusion
Liquidation is a necessary safety mechanism in leveraged trading, and liquidation/Clearance fees ensure that this process happens fairly and efficiently. At SunCrypto, our goal is to minimize your losses and keep your trading experience smooth even during market volatility.
Always trade with proper risk management and be aware of your leverage and margin levels to avoid liquidation events. For any questions, feel free to contact our support team at help.suncrypto.in.