Contract liquidation occurs because you have leveraged your funds, and the price fluctuations exceed your bearable loss range. In simple terms:
• Opening a short position: If the price of the coin rises, you will lose money
• Opening a long position: If the price of the coin falls, you will lose money
• When the loss amount approaches your invested margin, the system will forcibly close your position (i.e., liquidation) to prevent larger losses.
The larger the leverage, the smaller the fluctuations you can withstand, making liquidation more likely.
Do you need an explanation of the concept of forced liquidation line and maintenance margin?
