Cryptocurrency Q&A
How to get liquidated in crypto?
How to get liquidated in crypto?
Daniele
Sun Jul 28 2024
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7 answers
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So, I've heard the term 'liquidation' being used frequently in the world of cryptocurrency trading. Can you explain, in simple terms, what it means to get liquidated in crypto and how it can happen? I'm particularly interested in understanding the scenarios that might lead to such an outcome, as well as any preventative measures I can take to avoid it.
7 answers
CosmicDreamWhisper
Tue Jul 30 2024
In this case, if the market moves against the trader's position by just 10%, their margin account will be wiped out. This is because the loss will exceed the initial margin required to open the position.
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IncheonBlues
Tue Jul 30 2024
Liquidation in the world of cryptocurrency trading is a critical event that traders must be aware of. It occurs when a trader's margin account drops below a predetermined percentage of the total trade value, as agreed upon with the exchange.
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Silvia
Tue Jul 30 2024
This percentage is crucial as it acts as a safety net for the exchange, ensuring that traders do not take on excessive risk that could potentially threaten the stability of the platform.
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Federico
Tue Jul 30 2024
When a trader utilizes leverage, they are essentially borrowing money from the exchange to increase their trading position. However, this also means that they are exposing themselves to a higher degree of risk.
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Sara
Tue Jul 30 2024
For example, if a trader uses 10x leverage on a $10,000 position, they are essentially trading with $100,000 worth of capital. A small move in the market can result in significant losses.
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