Liquidation doesn’t happen in an instant—it’s a process. Understand how it works, and you’ll know when to act.
[Step 1] Initial margin: The funds tied up when you open a position. For example, with 10x leverage, it’s 10% of the position size.
[Step 2] The market moves against you, and your margin ratio rises. The app starts showing “Insufficient margin” alerts,
At this point, you still have options: reduce your position to lower leverage, or add margin.
[Step 3] Maintenance margin level: Once losses eat into the maintenance margin requirement, the system starts partially liquidating your position,
closing part of it first to reduce risk, rather than closing it all at once.
【Step 4】If things keep getting worse, your entire position will be liquidated, and your trade is over.
【Key point】The time between the warning in Step 2 and liquidation in Step 3 is your last chance to save yourself.
But at this point, most people don't reduce their position. Instead, they say, “I'll wait a little longer” or “I'll add more to average down”—
turning a small, manageable mistake into a devastating one. Remember: when the warning pops up,
the right move is to reduce your position, not add to it.
What do you think? Share your experiences in the comments.