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What Is Liquidation in Futures Trading?
Liquidation happens when a leveraged position loses too much margin. Learn how it works and how to avoid it.
What triggers it
When you trade with leverage, your margin acts as a safety buffer. If losses reduce your margin below the required maintenance level, the exchange automatically closes your position. That is liquidation.
The liquidation price
Each position has a liquidation price that depends on your entry price, leverage and margin mode. Higher leverage puts the liquidation price much closer to your entry price.
Isolated vs cross margin
In isolated margin, only the margin assigned to that position is at risk. In cross margin, your whole available balance backs the position, which can delay liquidation but risks more of your funds.
Reducing the risk
Use lower leverage, keep extra margin, set stop-loss orders before the liquidation price, and size positions so one move cannot wipe out your account.
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Educational content only, not financial advice. Crypto assets carry a high risk of loss.
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