Liquidations & Risk

Liquidation is a core safety mechanism of any perpetual trading system.

What liquidation means

A position can be liquidated when its collateral is no longer sufficient to support the open exposure under the protocol's risk rules.

Why liquidation happens

Liquidation risk depends on:

• Leverage
• Collateral level
• Market movement
• Position direction
• Risk configuration for the asset

What traders should watch

Always monitor:

• Liquidation price
• Position size
• Available collateral
• Volatility of the selected market

Risk reminder

Higher leverage increases liquidation risk significantly. Even a relatively small market move can cause full loss of collateral on highly leveraged positions.

Best practices

• Use leverage conservatively
• Review liquidation level before confirming
• Avoid over-sizing positions
• Understand fee and rollover impact on net margin