Liquidation cascade
A liquidation cascade is a chain of forced closes: traders with similar entries and leverage have liquidation prices a few dollars apart, the first one sells at market, that pushes the price into the next, and so on. Because those levels are known in advance, the cluster becomes a magnet; a $2.74 billion night of short liquidations is the other direction. Liquidation on Mochatrade.
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In the help centreSee how leverage and margin work on MochatradeRelated terms
- Liquidation / forced square-offLiquidation, or forced square-off, is the venue closing a leveraged position because the margin can no longer cover…
- Margin callA margin call is a broker's demand for more funds when your account falls below the required margin; ignore it and…
- Leverage in tradingLeverage is controlling a position bigger than the money you put up. At 5x, ₹10,000 of margin controls ₹50,000, so a…
- Leverage ratioThe leverage ratio is position value divided by margin: ₹50,000 on ₹10,000 is 5x. One over the ratio is how far the…
- Liquidation priceThe liquidation price is where the venue closes your leveraged position, computed from entry, leverage and margin…
- Stop-loss orderA stop-loss order turns into a market order when the price reaches a trigger, to cap a loss. It is a request, not a…
Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.