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Liquidation
Forced position close by the exchange when losses consume all posted margin — common with high leverage.
What it is
Liquidation happens when a leveraged position's losses exceed the margin you posted. The exchange's liquidation engine force-closes the position to prevent negative balance. With 10× leverage, liquidation triggers at ~10% adverse move; with 100× leverage, ~1%. Crypto markets routinely see 'liquidation cascades' during volatile moves: one wave of liquidations creates the selling that triggers the next wave, creating violent 5-10% candles in minutes. Liquidation maps (visible on Coinglass, etc.) show price levels where large liquidation clusters sit — these become magnets for price.
Example
A trader opens 50× long on BTC at $76,000 with $1,000 margin = $50,000 position. BTC drops 2.1% to $74,400 in a 10-minute candle. Liquidation engine triggers; position closes at $74,396. Trader's $1,000 = $0 in 10 minutes.
How Indikora uses Liquidation
Indikora's Liquidation Map shows where major liquidation clusters sit on BTC and ETH — these levels often act as price magnets and inform trade plan TPs.
Related terms
- Leverage — Borrowed capital that multiplies position size — and proportionally multiplies both gains and losses.
- Futures Contract — A derivative contract tracking an asset's price — used for leverage, shorting, and hedging.