What does virtual currency liquidation mean?

Virtual currency liquidation refers to the behavior of being forced to liquidate due to insufficient margin due to price changes during margin trading. It can lead to loss of money, mood swings, and market turmoil. In order to avoid liquidation, you should set up reasonable leverage, strictly stop losses, take profits promptly, control your emotions and ensure sufficient funds.

Virtual currency liquidation

What is virtual currency liquidation?

Virtual currency liquidation refers to the behavior of being forced to close the position by the platform due to insufficient margin balance due to market price changes during virtual currency margin trading.

How to generate virtual currency liquidation?

In virtual currency margin trading, traders use margin to amplify the size of the transaction. When the market price moves against the trader, the margin balance will gradually decrease. If the margin balance drops below a certain level, the platform will force liquidate the position to recover losses.

The impact of liquidation

• Fund loss: Liquidation will cause traders to lose part or all of their margin.
• Emotional swings: Liquidation may bring serious negative emotions to traders, leading to impulsive trading or overconfidence.
• Market Impact: Large-scale liquidation may trigger a chain reaction and lead to wider market turmoil.

How to avoid virtual currency liquidation?

• Set leverage appropriately: Choose a leverage multiple that is consistent with your risk tolerance.
• Strict Stop Loss: Set clear stop loss points to limit potential losses.
• Take profit in a timely manner: Take profit in a timely manner when making a profit to prevent profit taking.
• Control your emotions: Avoid trading in an emotional state.
• Adequate Funding: Ensure sufficient margin balance to cope with market fluctuations.

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