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  1. Home
  2. /Glossary
  3. /Liquidation
Back to Glossary
trading

Liquidation

When a borrower's collateral is forcibly sold because their position became too risky.

Definition

When a borrower's collateral is forcibly sold because their position became too risky. This happens in margin trading when prices move against you too fast. Getting liquidated means losing your collateral, often with additional fees.

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Related Terms

Collateral

Assets you put up as security when borrowing.

Margin

Borrowed money used to increase trading position size.

Leverage

Borrowing funds to increase your trading position beyond what your capital alone would allow.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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