Liquidation
When your leveraged position is automatically closed because losses became too large.
Liquidation happens when you trade with leverage
and the market moves against your position so much
that your margin (collateral) can no longer cover the loss.
When that point is reached, the exchange automatically closes your trade
to prevent further losses — and you lose your margin.
Example
You open a 10× long on Bitcoin with $100.
If Bitcoin drops by 10%, your position is liquidated,
because your $100 margin is wiped out.
Why it matters
- Protects exchanges from unpaid losses.
- Teaches traders to respect risk management.
- Happens faster with higher leverage or volatile markets.
Liquidation is one of the biggest dangers in crypto trading,
especially for beginners who underestimate how quickly it can occur.
💡 Lanzo Tip
Always use a stop-loss and small leverage.
Treat liquidation as your worst-case scenario —
if it happens, it’s a sign to rethink your risk plan, not to chase revenge trades 💀