Liquidation is the automatic closure of a perpetual position when it no longer has enough margin to support potential losses.
It is a built-in risk management mechanism designed to prevent losses from exceeding the funds committed to a position.
Why Does Liquidation Happen?
When you open a leveraged position, your margin acts as collateral.
If the market moves against your position, your losses reduce your available margin.
Once your remaining equity reaches the required maintenance margin, the system automatically closes your position. This process is known as liquidation.
Why Does Bayse Liquidate Positions?
Liquidation helps:
Prevent losses from exceeding your committed margin.
Protect the integrity of the trading platform.
Reduce the risk of negative account balances.
It is an automatic system process and cannot be manually overridden.
Can I Prevent Liquidation?
While liquidation cannot always be avoided, you can reduce the likelihood by:
Using lower leverage.
Monitoring your positions regularly.
Maintaining sufficient margin.
Closing your position before it reaches its liquidation price.
Frequently Asked Questions
Does liquidation mean I lose my entire account balance?
No.
Liquidation applies only to the affected position. Depending on your margin mode, other positions or available account funds may not be affected.
Can support reverse a liquidation?
No.
Liquidations are triggered automatically based on market conditions and the platform’s risk management rules.