Risk management · Glossary
Liquidation
A forced reduction or closure when margin no longer meets requirements.
Definition and explanation
Liquidation occurs when a leveraged position breaches a venue's maintenance-margin or risk thresholds. The trigger price depends on the contract, margin mode, position size, collateral, fees and venue-specific calculation method. A simple calculator can only estimate liquidation unless it reproduces the exchange's exact rules.
Example
If losses reduce the account's margin below the required maintenance level, the venue may liquidate some or all of the position.
Educational information only. Trading terms and contract mechanics can vary by venue and market. Verify the rules of the provider you use.