Liquidation
The forced closing of a leveraged position when its collateral no longer covers losses. On crypto derivatives venues this is automatic and can happen within seconds.
Also called forced liquidation · liquidated
The forced closing of a leveraged position when its collateral no longer covers losses. On crypto derivatives venues this is automatic and can happen within seconds.
Why it matters
Clusters of liquidations amplify moves, because each forced close pushes the price further in the same direction.
Related terms
- Leverage
- Margin
- Short Squeeze