ALADDIN 🟣🔮
@aladdin-x8.eth
🚨 What is liquidation in crypto markets? 🔍 With leverage trading, you can open positions larger than your account balance — for example, 2x leverage doubles your buying power but also amplifies your gains and losses! 📉 When the market moves against you and hits the liquidation price, the exchange forcibly closes your position to recover the borrowed funds – you lose almost all your margin! 💡 Why does liquidation happen so often? ✅ Using very high leverage brings your liquidation price dangerously close to your entry price, so even small market moves can trigger liquidation. ✅ Some traders think liquidation is the same as a stop loss, but it’s far more expensive! 🔔 Stop losses close your position before liquidation and preserve some of your margin, while liquidation wipes out your entire margin.
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ALADDIN 🟣🔮
@aladdin-x8.eth
🔍 Example: 💰 Let’s say you use $5,000 as margin to open a $100,000 position with 20x leverage. Maintenance margin is $1,000 (1%). 📉 If the price hits your liquidation level, you lose everything (margin + losses). But if you set a stop loss just above liquidation, you avoid losing your entire margin. ⚠️ Key tips: ✔️ Don’t confuse liquidation with stop loss! ✔️ Always set stop losses away from liquidation. ✔️ Keep leverage low and watch your margin to avoid liquidation. ✔️ Smart risk management is key to long-term survival!
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