#DayTradingStrategy
๐ฃ Why Liquidation Price Gets Closer When Holding a Long Position
In futures trading, liquidation happens when your position moves against you so much that your margin (collateral) can no longer cover the loss.
If you're holding a long position, your liquidation price is the price below your entry where the exchange force-closes your position to protect itself.
๐ป Hereโs Why It Moves Closer:
1. Funding Fees or Borrowing Costs
If you hold for long, you pay funding fees (usually every 8 hours).
This eats into your margin, lowering the buffer and pulling your liquidation price closer ๐.
2. Unrealized Losses Accumulate
If the price drops and doesnโt recover, your loss grows while your margin stays the same.
The closer you are to margin exhaustion, the closer liquidation becomes.
3. Auto-Deleveraging (on some platforms)
High leverage and low volume assets can cause your liquidation price to adjust even without price moving much, especially if volatility spikes โก.
๐งฎ Example:
You go long BTC at $108,000 with 10x leverage.
If BTC drops to ~$102,500, liquidation hits.
But if youโre paying fees, or if price hovers sideways or dips slowly, your liquidation price creeps up, say to $103,500 or higher ๐ฌ.
โ Pro Tips:
Use low leverage (e.g. 2xโ3x)
Add margin to widen liquidation range
Close partially if trend turns
Avoid overnight fees stacking on sideways markets
AddinG.. margiN.. wiLL be.. A .. iDeA...๐๐๐๐