Liquidation Explained for a Five-Year-Old: When Your Crypto Balloon Gets Popped
#IfYouAreNewToBinance #FiveYearOldTalk
#CryptoEducation💡🚀
liquidation explained for a five-year-old:
🎈 Imagine you have a balloon. You borrow air from your big brother to make it really big. You say:
"If my balloon gets too small, you can pop it!"
So you play with your balloon. But suddenly, it starts shrinking because the wind blows hard.
💥 Your big brother sees the balloon getting small and POP! He pops it — that's the deal, remember?
In crypto, it's the same:
You borrow money to buy coins (like making your balloon bigger).
If the price goes the wrong way and your money gets too small...
The exchange pops your trade (they close it) so you don't lose more than you have.
That popping is called LIQUIDATION.
So liquidation is when:
You borrow to trade
Price moves against you
The exchange pops your trade to protect themselves