What is Liquidation Price?
Liquidation Priceâ
The liquidation price is the price level at which your position will be automatically closed to prevent further losses. When the market price reaches this level, your position is liquidated and you lose your margin.
Why It Mattersâ
Liquidation risk changes with market price, leverage, position direction, and margin. Higher leverage usually puts the liquidation price closer to your entry price.
For a long position, liquidation can happen if the market price falls to the liquidation price. For a short position, liquidation can happen if the market price rises to the liquidation price.