Glossary

Liquidation

A leveraged position being forcibly closed by the exchange or broker because of insufficient margin. In crypto, liquidation clusters act like price magnets.

The liquidation price depends on leverage and entry price: at 1:20 leverage, a move of about 5% against you wipes out the position (excluding fees).

Cascading liquidations produce violent moves; "liquidation heatmap" tools visualize these clusters. Low leverage and a real stop make liquidation a non-issue.

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