Know the golden rule to avoid losing your account!
📉 What does “liquidation” mean in trading?
Liquidation occurs when your futures position loses so much money that your collateral (margin) is no longer sufficient to cover it. At that moment, Binance automatically closes your position to prevent you from having a negative balance.
> 💥 Result: you lose ALL the margin you put into that trade.
⚙️ How does liquidation work?
1. Open a position (long or short) with leverage.
2. If the price moves against you, your PNL (unrealized loss) starts to increase.
3. If it reaches the liquidation price, Binance automatically executes a total closing order.
4. You lost your allocated capital in that trade.
> Example: You use $100 with 10× leverage → you control $1,000. If the price drops 10% against you, you get liquidated and lose the $100.
💡 How is the liquidation price calculated?
It depends on several factors:
Leverage
Margin type (isolated or cross)
Available balance in the account
Volatility of the asset
👉 Binance shows you the exact liquidation price when you open a position.
🧠 Strategies to avoid liquidation
1. Use lower leverage (5× or less if you are just starting).
2. Trade with isolated margin: this way it does not affect your entire balance.
3. Always place a technical Stop Loss, not an emotional one.
4. Calculate your risk before opening each trade.
5. Do not enter with all your capital in a single trade.
6. Avoid trading on extreme news (FOMC, CPI, etc.)
7. Watch the liquidation price and adjust it if necessary.
🧠 How to use liquidation to your advantage (advanced strategy)
📊 Analysis of mass liquidation prices:
Many traders set their stops very close to psychological or round prices. If you learn to identify massive liquidation zones, you can trade against the movement to take advantage of the rebound.
> Example: If BTC suddenly breaks a support, but a zone full of stops is observed at $60,000, many will be liquidated there. Then the price usually rebounds strongly.
⚠️ Myths about liquidation
❌ “They only liquidate me if I use high leverage”
→ False. Even with 2× leverage, you can be liquidated if you do not manage your position well.
❌ “Binance wants to liquidate me”
→ False. Liquidations are automatic according to the system's rules. But whales can cause movements to sweep stops.
🚀 Conclusion: liquidation is a lesson, not a curse
All traders have been liquidated at some point. What makes the difference is who learns to protect their capital and who does not.
Remember: the trading game is not won by the one who trades the most, but by the one who survives the longest with control, strategy, and risk management.
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