How to Avoid Crypto Liquidation?

Adekunle Joshua

The term liquidation traditionally describes the conversion of assets into cash.

But in futures trading, liquidation is something you have to avoid by all means.

Leveraged positions are prone to volatile price swings, which may cause an investor's holdings to plunge into negative balance instantaneously

In such a scenario, losses can be more significant than the maintenance margin, which leads 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.

Stop-loss strategy Set a specific price to close the position automatically to minimize the loss

Insurance Pool The insurance pool will cover the loss if the liquidation price exceeds the initial margin.

Reducing leverage Reducing leverage reduces liquidation risk, as those with lower leverage have a lower probability of being liquidated.