What is liquidation in trading?

Liquidation in trading refers to the process of closing out a position in an asset, typically due to a trader's inability to meet margin requirements or because the market price has moved against them.

How do I avoid liquidation in margin trading?

To avoid liquidation, ensure that you maintain sufficient margin in your account. This can be done by monitoring your positions, setting stop-loss orders, and avoiding over-leveraging your trades. Always know your liquidation price and keep enough funds in your account to cover potential losses.

Is liquidation the same as selling?

While liquidation involves selling assets, it is different from voluntary selling. Liquidation happens automatically when a trader's position falls below the required margin, whereas selling can be a discretionary decision made by the trader to lock in profits or limit losses.

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Margin Trading

What is LIQUIDATION?

LIQUIDITY IMPACT ON TRADES

Liquidity Impact on Trades assesses how the availability of buyers and sellers affects trade execution. High liquidity generally leads to tighter spreads and better execution prices, while low liquidity can cause slippage and wider spreads.