What is the meaning of liquidation in the context of cryptocurrency?

3 answers

• Evelyn MariaJun 12, 2020 · 5 years ago
  Liquidation in the context of cryptocurrency refers to the process of closing out a trader's position when they are unable to meet the margin requirements set by the exchange. When a trader's position is liquidated, their assets are sold off to cover their losses and repay any outstanding debts. This is done automatically by the exchange's system to protect both the trader and the exchange from further losses. Liquidation can occur when the market moves against the trader's position, causing their losses to exceed their available margin. It is important for traders to manage their risk and maintain sufficient margin to avoid liquidation.
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• Hema PujariAug 26, 2024 · a year ago
  Liquidation in cryptocurrency trading is like getting a margin call in traditional finance, but with a twist. When a trader's position is liquidated, it means they have lost all their invested funds and their position is forcefully closed by the exchange. This can happen when the market moves sharply against their position, causing their losses to exceed their available margin. Liquidation is a risk that traders need to be aware of and manage properly to avoid losing all their funds.
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• Andre GreenOct 31, 2020 · 5 years ago
  Liquidation in cryptocurrency trading is a mechanism used by exchanges to protect themselves and traders from excessive losses. When a trader's position is liquidated, it means their assets are sold off to cover their losses and repay any outstanding debts. This helps to ensure that the exchange can honor its obligations and prevents traders from accumulating too much debt. It's important for traders to understand the liquidation process and manage their risk accordingly to avoid unexpected losses.
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