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What does liquidation mean in contracts (contract liquidation rules)

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What does liquidation mean in contracts? Liquidation in contracts refers to clo

What does liquidation mean in contracts (contract liquidation rules)

What does liquidation mean in contracts? Liquidation in contracts refers to closing positions through leveraged trading when the market is falling. Generally, there is a risk of liquidation when prices rise; and once they drop below a certain point, it can cause liquidation risk and affect the overall market sentiment.

Liquidation in contracts refers to significant losses in the market due to volatile market fluctuations. It can be understood as contract investors being trapped and suffering huge losses, resulting in the loss of funds. Specifically, if the market does not experience a significant pullback or rapid extension, it is easy to completely withdraw profits. This situation is also called liquidation.

Contract Liquidation Rules

Contract liquidation rules: In the event of liquidation during trading, the following situations generally occur:

1. During liquidation, the main force’s buying volume exceeds the selling volume, so the main force can adjust based on their own risk tolerance.

2. Due to significant fluctuations in leverage ratios, a large number of liquidation orders occur (such as a drop in BTC/ETH prices). When the liquidation amount reaches a certain value, the market will automatically trigger stop-loss liquidation.

3. During liquidation, when there is a significant increase or loss of funds, the main force needs to take necessary measures to prevent liquidation.

4. If the liquidation loss is significant and the liquidation time cannot be controlled, it is necessary to immediately halt operations to handle the liquidation event.

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