What is the liquidation threshold for cryptocurrency trading?

3 answers

• Hunter FranksJan 05, 2022 · 4 years ago
  The liquidation threshold in cryptocurrency trading refers to the point at which a trader's position is automatically closed by the exchange due to insufficient margin. When a trader's account balance falls below the liquidation threshold, the exchange will liquidate their position to cover potential losses. This is done to protect both the trader and the exchange from excessive risk. It's important to monitor your account balance and ensure it stays above the liquidation threshold to avoid unexpected liquidations.
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• Manish sharmaApr 07, 2021 · 4 years ago
  Liquidation threshold is like a safety net for cryptocurrency traders. It helps prevent traders from losing more money than they have in their account. When your account balance falls below the liquidation threshold, the exchange will step in and close your position to limit potential losses. So, it's crucial to understand and keep an eye on the liquidation threshold to manage your risk effectively.
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• F-BravoMar 27, 2021 · 4 years ago
  BYDFi, a popular cryptocurrency exchange, implements a liquidation threshold to protect its traders. When a trader's account balance reaches the liquidation threshold, BYDFi will automatically close their position to prevent further losses. This feature ensures that traders are not exposed to excessive risk and helps maintain a stable trading environment. It's important to familiarize yourself with the liquidation threshold on BYDFi and other exchanges you use to ensure you can manage your positions effectively.
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