What is the trading method for perpetual contract liquidation?

Perpetual contract liquidation means that the loss during trading exceeds the margin, resulting in forced liquidation. Trading methods include: short orders are liquidated (the market goes up, the position is in the opposite direction) and long orders are liquidated (the market goes down, the position is in the opposite direction). Methods to avoid liquidation include: choosing an appropriate margin ratio, controlling positions, setting stop loss orders, monitoring market conditions in real time and covering positions in a timely manner.

Trading method of perpetual contract liquidation

What is perpetual contract liquidation?

Perpetual contract liquidation means that when trading perpetual contracts, due to the low margin ratio, the position direction is opposite to the market trend, and the loss exceeds the margin principal, so the position is forced to be automatically closed behavior.

Trading method of perpetual contract liquidation

Normally, the trading method of perpetual contract liquidation is as follows:

1 . Short orders were liquidated

When investors short the perpetual contract, if the market price rises and the investor’s position direction is opposite to the market trend, the loss will increase. If the loss exceeds the margin principal, the investor will be liquidated.

2. Long orders are liquidated

Contrary to short orders, when investors are long perpetual contracts, if the market price falls, the direction of the investor’s position will be Contrary to market conditions, losses will increase. If the loss exceeds the margin principal, investors will also be liquidated.

How to avoid perpetual contract liquidation?

In order to avoid permanent contract liquidation, investors can use the following methods:

• Choose the appropriate margin ratio: The higher the margin ratio, The risk of liquidation is lower.
• Control your position: Don’t overleverage and control your position reasonably.
• Set stop loss orders: Setting stop loss orders can limit losses and prevent liquidation.
• Monitor market conditions in real time: Pay close attention to market conditions and adjust positions in a timely manner.
• Timely cover-up: When losses are large, you can consider appropriate cover-up to reduce the risk of liquidation.

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