In this round of volatility, the perpetual contract $ETH experienced a $1.9 million short position forced liquidation.
Let's discuss forced liquidation using this example.
Forced liquidation (commonly known as a margin call) occurs when losses in a leveraged position cause the margin to fall below the required maintenance margin, at which point the system forcibly closes the position according to its rules.
The commonly used term "long squeeze" refers to a price drop triggering forced liquidation of long positions, which in turn further lowers the price; a "short squeeze" occurs when a price rise triggers forced liquidation of short positions, which are then bought back and raise the price.
When using leveraged positions, first consider whether you can withstand the worst-case scenario before looking at what the indicators are saying.
Let's discuss forced liquidation using this example.
Forced liquidation (commonly known as a margin call) occurs when losses in a leveraged position cause the margin to fall below the required maintenance margin, at which point the system forcibly closes the position according to its rules.
The commonly used term "long squeeze" refers to a price drop triggering forced liquidation of long positions, which in turn further lowers the price; a "short squeeze" occurs when a price rise triggers forced liquidation of short positions, which are then bought back and raise the price.
When using leveraged positions, first consider whether you can withstand the worst-case scenario before looking at what the indicators are saying.