📚 DAY 16 - Learn all Crypto terms in 30 days
🔹 1. Mark Price
→ Is the reference price used to calculate unrealized profit/loss and liquidate futures contracts.
💡 Example: Even though BTC is trading at 62,000, the mark price is 61,800 → the liquidation order will be based on 61,800 rather than the market price.
📌 The goal is to prevent price manipulation, especially when liquidity is low.
⚠️ Monitor the mark price instead of just looking at the current price on the chart.
🔹 2. Isolated Margin
→ Is a mechanism that uses only a portion of capital for each order, helping to limit the risk of “total account liquidation.”
💡 Example: You open a long ETH position with 100 USDT isolated, if the position loses to 0 → you only lose 100 USDT and not the remaining balance.
📌 You can adjust leverage separately for each isolated order.
⚠️ If you want to protect the entire account, you should choose isolated mode instead of cross.
🔹 3. Short Squeeze
→ Occurs when too many people place short orders and the price suddenly rises sharply → forcing short positions to close, creating additional buying pressure → the price rises even faster.
💡 Example: Deep negative funding rate, high open interest, sudden price pump → very high likelihood of a short squeeze.
📌 Whales often take advantage of short squeezes to force liquidations and create large waves.
⚠️ Do not short when the market is “too crowded with short positions.”
🔹 4. Take Profit / Stop Loss (TP/SL)
→ Is an automatic tool for locking in profits or cutting losses to reduce risk and protect capital.
💡 Example: Open long BTC at 60,000, set TP at 62,000 and SL at 59,000.
📌 Setting reasonable TP/SL helps maintain discipline and avoid getting “caught at the top - cutting at the bottom.”
⚠️ Do not skip TP/SL when using high leverage, as you may be liquidated unexpectedly.
