Liquidation FAQs

What is liquidation in futures trading?
In futures trading, liquidation occurs when your margin balance is insufficient to keep your position open. This usually happens when the market moves again...
Thu, 29 May, 2025 at 5:08 PM
How does liquidation work in Future Trading?
Let's say you open a 10x long position at: Entry Price = 8.458 USDT Leverage = 10x Margin Type = Isolated Margin Maintenance Margin Ratio...
Thu, 29 May, 2025 at 5:09 PM
Why does liquidation exist in futures trading?
The purpose of liquidity in futures trading is to protect traders and exchanges from losses that surpass the initial margin. Market fluctuations have the po...
Thu, 29 May, 2025 at 5:09 PM
How does leverage increase the risk of liquidation?
Leverage amplifies both profits and losses in futures trading. For example, with $1,000 at 10x leverage, a $10,000 position loses $100 with a 1% market drop...
Thu, 29 May, 2025 at 5:10 PM
How can stop-loss orders help minimize liquidation risk?
To limit losses before they reach the liquidation point, stop-loss orders automatically close positions at a predetermined price. To prevent premature trigg...
Thu, 29 May, 2025 at 5:10 PM
What is a trailing stop-loss, and how does it reduce liquidation risk?
A trailing stop-loss adjusts dynamically as the market moves in your favor, locking in profits while limiting losses. For example, if a trade rises from ₹1,...
Thu, 29 May, 2025 at 5:10 PM
How does market volatility affect liquidation risk?
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 $1,00...
Thu, 29 May, 2025 at 5:10 PM
What are some common mistakes & how to avoid liquidation?
Common mistakes include overleveraging, ignoring stop-loss orders, overtrading, poor margin management, and chasing losses. To avoid these, use low leverage...
Thu, 29 May, 2025 at 5:11 PM