What is Liquidation?

A liquidation is the forced closing of a leveraged position when its margin can no longer cover losses. When many leveraged positions sit at similar prices, one liquidation can trigger the next, a cascade that pushes price violently.

How to read it

Clusters of liquidation levels act like magnets. A move into a dense long-liquidation zone can accelerate as forced selling feeds on itself.

FAQ

How do I avoid liquidation?

Use lower leverage, set stops above your liquidation price, and avoid trading into stacked liquidation zones. See our guide on avoiding liquidation.

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