Understand the risk of liquidation by selling margins
The cryptocurrency trading world has become increasingly popular as many investors want to take advantage of a large return on investment. However, this growth also pose a new risk that should be carefully considered before commercial margins – a trade in leverage to strengthen profits and losses.
One of the most significant risks associated with margin of cryptocurrency is liquidation. Liquidation occurs when the position of the trader is contrary to their margin account, resulting in loss of funds or forced sale of property. In this article, we will investigate what the liquidation means for margin merchants, risks and how to protect themselves.
What is the liquidation?
The liquidation occurs when the merchant exceeded their margin in the exchange or cryptocurrency market. This can happen in several ways:
- In excess of lever : Trading with too much lever can quickly deplete your balance, so the liquidation can be liquidated.
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- Market fluctuations : Prices of high market volatility can decrease rapidly, resulting in loss of value and eradicating.
Risk of liquidation
Liquidation can cause significant losses to traders including:
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- Emotional stress : pressure to make quick decisions and manage risk can cause stress and demotivation.
- Loss of Opportunities : Liquidation can also lose potential profits if you are forced to close your position.
Protect yourself from liquidation
While liquidation is a real risk, you can take action to soften its effect:
- Set clear goals and budgets
: Define your investment goals before trade and set real goals.
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- Increase your portfolio : By spreading your investment in various assets, you can reduce the risk and increase the likelihood of profitable transactions.
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- Use the lever in wise : Be careful when using leverage as it can enhance both profits and losses.
Best trading margin of cryptocurrency
- Start a small : Start with the size of a conservative position to check your trading skills and manage risks.
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- Regularly review your account : Monitor your balance regularly to identify potential problems before they become the main concerns.
Conclusion
Cryptocurrency trading can be high -risk activities, but by understanding the risk and taking action to reduce them, you can reduce the likelihood of liquidation. By doing the best practice and knowing about a possible trap, you can successfully browse the margin trading world by protecting your financial future. Remember, it is always better to make a mistake when it comes to your investment.
Additional sources
* Exchange Guidelines : Get to know the exchange policy and margin trade rules.