In: Glossary
Liquidation
A forced close when your margin runs out.
A liquidation happens when your margin falls below the venue's maintenance requirement. The protocol force-closes your position to prevent your losses exceeding your collateral.
With high leverage, a surprisingly small move against you can trigger it. Managing position size and keeping spare margin are the main defences.
Liquidation risk is inherent to leveraged trading on any perp DEX.