I have written many times that liquidity in crypto markets is at a multi-year low. Markets are highly vulnerable to small price moves leading to cascades of sell transactions, all within minutes. Billions of dollars 💵 of liquidations can move Bitcoin price 10%, 20%, or even 30%, all within minutes! The Life of a Trader Traders get liquidated on their positions when they use leverage.
A liquidation engine is an automated trading strategy that immediately alleviates clients' margin deficiency. The exchange tracks cash in real-time, and if at any point, the cash balance falls below the margin balance, the liquidation engine automatically liquidates positions and decreases margin deficiency. In general, traders have little to no control over the liquidation engine, but they are held responsible for any losses resulting from this process.
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Source: Cointelegraph - 🏆 562. / 51 Read more »