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Liquidations are the easiest but also most unfortunate way to close positions. Iiquidation happens when your position is forcefully closed once your margin (collateral) is no longer enough to cover potential losses. Here’s a simple breakdown:
  • When you open a leveraged position (e.g., 10x leverage), you’re borrowing funds to trade a bigger size.
  • If the trade moves against you and your losses approach your initial margin, the exchange steps in to protect itself.
  • It automatically closes your position to prevent your account from going negative. This is called liquidation.
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