☠️ Liquidation: when the exchange closes your position for you.
Not a margin call. Not a warning.
The position is gone, and so is the money behind it.
How it happens: you borrow to trade bigger than your balance.
Price moves against you far enough that your funds can no longer cover the loss.
The exchange closes you out to protect itself.You don’t get a vote.
❗️ The part people miss: leverage decides how far “far enough” is.
At 10x it takes a 10% move. At 50x, 2%. Crypto does 2% before lunch.
👉 How strategies avoid it: controlled leverage, position sizing capped against equity,
and a stop-loss that exits long before the exchange ever would.
The stop costs you a small loss. Liquidation costs the whole position.
Not a margin call. Not a warning.
The position is gone, and so is the money behind it.
How it happens: you borrow to trade bigger than your balance.
Price moves against you far enough that your funds can no longer cover the loss.
The exchange closes you out to protect itself.You don’t get a vote.
❗️ The part people miss: leverage decides how far “far enough” is.
At 10x it takes a 10% move. At 50x, 2%. Crypto does 2% before lunch.
👉 How strategies avoid it: controlled leverage, position sizing capped against equity,
and a stop-loss that exits long before the exchange ever would.
The stop costs you a small loss. Liquidation costs the whole position.
