Cryptocurrency surges 15%, futures gap down to limit down, forex slippage directly liquidates... The market is always playing out investors' worst nightmares. And the scariest part isn't the loss itself, but the "instant zeroing out" caused by contract liquidation — you not only lose all your funds, but may also be pursued for debts. Why does liquidation happen? Why is high leverage operation particularly dangerous? How can you avoid stepping on these landmines?
The truth about contract liquidation: the moment the margin disappears
In simple terms, contract liquidation means: you bet on the wrong direction, lose so much that you can't even cover the final margin, and the system forcibly closes your position.
When you engage in any leveraged trading, the broker requires you to deposit a certain proportion of margin as a "risk guarantee." Suppose you use 100,000 yuan of capital to open a 10x leveraged futures position, effectively controlling 1 million yuan. Once the market moves 1% against you, you lose 10% of your capital; if the movement is 10% against you, not only does the guarantee...