Questions tagged [avoid liquidation]

emma_anderson_scientist Wed Jul 10 2024 | 5 answers 1513

When navigating the volatile world of cryptocurrency trading, avoiding liquidation is paramount. Liquidation, simply put, is the forced closure of a trading position due to insufficient funds to maintain the required margin. To steer clear of this perilous situation, traders must first ensure they have a solid understanding of margin trading and its risks. Secondly, maintaining a healthy margin level is crucial, allowing for enough wiggle room in case of adverse market movements. Diversifying one's portfolio across different cryptocurrencies and employing stop-loss orders can also mitigate the chances of liquidation. Lastly, staying updated on market news and trends, as well as employing sound risk management strategies, are vital in preventing unwanted liquidations in crypto trading.