How does the process of liquidation work in the crypto industry?

3 answers

• Alexa HernandezDec 18, 2021 · 4 years ago
  Liquidation in the crypto industry refers to the process of closing out a trader's position when they are unable to meet the margin requirements. When a trader's account balance falls below the required margin level, the exchange automatically liquidates their position. This is done by selling the trader's assets at the current market price to cover the losses. It helps to prevent the trader from incurring further losses and protects the exchange from potential default. It is important for traders to monitor their margin levels and manage their risk to avoid liquidation.
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• karthiApr 21, 2025 · 4 months ago
  Liquidation in the crypto industry can be a stressful experience for traders. When a trader's position is liquidated, it means that their assets are sold off to cover their losses. This can result in significant financial losses for the trader. However, liquidation is an important risk management tool for exchanges to ensure the stability of the market. It helps to prevent the accumulation of large losses and maintains the integrity of the trading platform. Traders should be aware of the margin requirements and manage their positions carefully to avoid liquidation.
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• NicolajNov 14, 2020 · 5 years ago
  At BYDFi, the process of liquidation is similar to other crypto exchanges. When a trader's margin level falls below the required threshold, their position is automatically liquidated. This is done to protect both the trader and the exchange from potential losses. The assets are sold at the current market price to cover the losses. Traders should always monitor their margin levels and use appropriate risk management strategies to avoid liquidation.
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