Lesson 07 · 6 min
When the desk closes you
Liquidation is not a fine. It is the moment the cash behind the bet no longer covers it.
You posted cash so a larger position could exist. If price moves against you, that cash shrinks. At the maintenance line the venue stops waiting and closes the position. They do it so your loss does not become another customer's problem.
Entry is a teaching price of $100. The liquidation tick uses a small maintenance buffer so it sits a little before a total wipeout.
Entry
$100.00
Now
$94.00
Liquidation
$90.40
−$60.00 on a $1,000 long. About +6.0% of the way toward a wipeout. The picture liquidates near $90.40.
You do not pick the fill. The trigger is usually a mark price — MEXC calls the same job the fair price — not the last trade flashing on the tape. A scary wick on last price can leave you untouched. A quiet mark can close you while the chart looks calm.
- Higher leverage pulls the line closer to your entry. The picture assumes a small maintenance buffer, so the real venue line is a little nearer than '100 ÷ leverage.'
- A stop order is you asking to leave. Liquidation is the venue throwing you out. Stops can slip. Do not use the liquidation price as the plan.
- Isolated loses the slice. Cross can keep the trade open with the rest of the wallet, which means the rest of the wallet can go.
In one sentence. If you cannot point at the liquidation price before you click, you do not know the trade yet.
An isolated position is liquidated. The rest of the wallet was not assigned to it. What remains?