Liquid Margin and Liquidation - I Explain It Plain and Simple
Understanding the liquid margin of long and short positions in leveraged transactions is important in knowing how much collateral you will need in which situation.
Liquid margin varies according to price movements in both positions and represents the minimum collateral required to prevent the position from being closed (liquidated). I will try to explain below with simple examples for both long and short positions.
Liquid Margin and Liquidation
1. Liquid Margin in Long (Buy) Position: