GlossaryAdvanced
Liquidation Price
The price at which a leveraged position is automatically closed to prevent further loss.
The liquidation price is the price level at which a leveraged position's posted collateral is no longer sufficient to cover potential losses, triggering an automatic forced closure of the position.
Higher leverage generally means a liquidation price that's closer to the entry price, meaning a smaller adverse price move can trigger liquidation.
Examples
- A highly leveraged position has a liquidation price much closer to its entry price than a lightly leveraged one.
- Being liquidated generally means losing the collateral posted for that specific position.