How to Avoid Crypto Liquidation?
Adekunle Joshua
The term 'liquidation' traditionally describes the conversion of assets into cash.
However, in futures trading, liquidation is something you must avoid by all means
Leveraged positions are prone to volatile price swings, which may cause an investor's holdings to plunge into a negative balance instantaneously
In such a scenario, losses can be more significant than the maintenance margin, leading to liquidation
Crypto liquidation can occur either slowly or quickly, depending on the amount of leverage used.
Here are some smart crypto trading strategies to reduce the risks of liquidation:
1. Stop-loss strategy: Set a specific price to automatically close the position and minimize losses.
2. Insurance Pool: The insurance pool will cover the loss if the liquidation price exceeds the initial margin.
3. Reducing leverage: Lowering leverage reduces the risk of liquidation, as those with less leverage have a lower probability of being liquidated."
learn more