If the perpetual contract position is liquidated, do I still have the margin? What will happen?

Perpetual contracts are a kind of derivatives trading in cryptocurrency trading. For investors, the most fearful thing about playing perpetual contracts is liquidation. Although liquidation is intended to ensure the interests of the trading platform and traders and prevent market manipulation and unfair trading, it will fundamentally harm the interests of investors. Regarding the rules related to liquidation, many novices still don’t understand it. For example, if the perpetual contract liquidates, will the margin still be there? Related questions: Generally speaking, when a liquidation occurs, the margin will be used to make up for the loss. Whether this is done depends on the contract settings. Next, the editor will tell you in detail.

If the perpetual contract position is liquidated, do you still have the margin?

In the digital currency trading market, the liquidation event of the perpetual contract may result in the loss of investors' margin. This situation is often found in the trading rules and contract terms of the exchange.

The liquidation rule means that when the loss of a trader’s position exceeds the balance of his margin account, the trading platform will liquidate the position. Liquidation is usually caused by traders using excessive leverage. When market prices fluctuate and losses exceed the tolerable range, liquidation will be triggered. In this case, the trading platform will quickly close the trader's position to avoid further losses. In order to avoid liquidation, traders need to carefully choose leverage, control risks and set stop loss points. Reasonable risk management and capital management strategies are essential to avoid liquidation

Normally, when a perpetual contract position liquidates, the exchange will liquidate the position based on market prices and contract rules. This may result in margin being used to cover losses and paid to counterparties to close out liquidated positions. If the loss exceeds the margin, the exchange may deduct additional money from the trader's account to cover the loss. In some cases, exchanges may also take other measures against position holders to reduce the impact of liquidation, such as reducing leverage or providing liquidation protection mechanisms.

What will happen if the perpetual contract liquidates?

The liquidation of the perpetual contract may cause investors to suffer margin losses, forced account liquidation, and pay additional fees, which will have a negative impact on credit records and psychological state. These effects are analyzed in detail next.

1. Margin loss:

Liquidation means that the investor's position will be forced to be liquidated, which may result in the loss of part or all of the margin. In the event of a liquidation, the exchange will usually use the margin in the position to offset the loss and pay it to the counterparty or to the exchange's risk fund.

2. Account closing:

When a position is liquidated, the exchange will immediately close the position and conduct transactions on the market to make up for the loss as soon as possible. This can cause a trader's account balance to go negative, or even to zero completely.

3. Additional charges:

After a liquidation occurs, if the loss exceeds the margin in the account, the exchange may charge additional fees to the trader to make up for the loss. This may include a margin call or payment of other fees.

4. Impact on credit record:

The exchange may record liquidation events and record them in the trader's transaction history. This may affect a trader's credit history and have an impact on their future trading activity.

5. Psychological impact:

Liquidation may have a negative impact on traders' emotions, leading to panic, anxiety and even loss of confidence, thus affecting their future trading decisions.

The above is the detailed content of If the perpetual contract position is liquidated, do I still have the margin? What will happen?. For more information, please follow other related articles on the PHP Chinese website!