Understanding Liquidation in Crypto Futures Trading
In crypto futures trading, liquidation occurs when a trader’s margin balance falls below the required maintenance margin level, typically due to adverse price movements. This triggers an automatic closure of the trader’s position by the exchange to prevent further losses.
For traders, liquidation serves as a crucial reminder of the importance of managing leverage effectively and setting appropriate risk management strategies. By maintaining adequate margin levels and utilizing stop-loss orders, traders can mitigate the risk of liquidation and protect their capital in volatile market conditions.
Additional Read: Liquidation in Crypto Futures Trading: Strategies to Minimize & Prevent it
Update in Liquidation Protocols: Varies based on the market and the size of your position
A liquidation clearance fee is applied to your position depending on the market and the size of your position, similar to the position square-off process in equity trading. The table below provides detailed information on the applicable liquidation fee percentages.
How Can You Avoid Paying Liquidation Fees?
You can easily avoid paying the liquidation fees on the CoinDCX platform while futures trading by simply building the practice of using stop-loss orders on all your open positions in the crypto futures market. This enables you to have proper capital and risk management in place for your trades.
