Being liquidated while shorting cryptocurrency margins occurs when the price of the cryptocurrency moves against your short position, reaching a level where the exchange automatically closes your position to limit further losses. In short trading, you borrow assets to sell them at the current price with the intention of buying them back later at a lower price, thereby profiting from the price difference. If the price rises instead, reaching a predefined liquidation level, the exchange closes your position to prevent additional losses. Liquidation is a risk management mechanism implemented by exchanges to protect both traders and the platform from excessive losses.
Updated over 5 months ago