Quick Guide: Understanding Liquidation Levels in Crypto Trading



Getting liquidated can wipe out your position in seconds. Here's what you need to know.

What's a liquidation level? It's the price point where your margin position gets force-closed by the exchange. Holding leverage means risk—cross that threshold and you're done.

How to calculate it:
- Long position: Entry price × (1 - margin%)
- Short position: Entry price × (1 + margin%)

With 5x leverage on 10,000 USDT? Your liquidation sits roughly 20% from entry. That's tighter than you think.

Pro tips:
• Always set stop-losses below liquidation level
• Use lower leverage on volatile pairs (Bitcoin, Ethereum typically swing 10-15% daily)
• Check real-time funding rates—they affect your risk exposure
• Don't overextend: 2-3x leverage gives you breathing room

The market doesn't care about your thesis. It cares about price action. Set your limits, manage your risk, and don't let emotions turn a bad trade into a liquidation notice.
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