Avoiding Liquidation in Crypto Leverage Trading
TradeLinkTable of contents
Leverage multiplies your gains—and your risks. Liquidation is a hidden trap for developers and quants who deploy systems without robust margin logic.
What’s Liquidation?
It’s when the exchange forcibly closes your position because your margin buffer can’t cover losses. If you make one wrong move, your position is auto-closed, leaving you with nothing.
Why It Happens:
Overleveraged positions
No stop-loss in place
Poor position sizing
Volatile market shocks
Prevention Tips:
Always define liquidation thresholds in your trading logic
Use tight stop-loss automation
Limit risk per position
Monitor the liquidation % dynamically
You need API-aware margin calculations and multi-exchange balance management if you're running a trader algorithm.
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