Perpetual contract liquidation means that the loss during trading exceeds the margin, resulting in forced liquidation. Trading methods include: short orders are liquidated (the market goes up, the position is in the opposite direction) and long orders are liquidated (the market goes down, the position is in the opposite direction). Methods to avoid liquidation include: choosing an appropriate margin ratio, controlling positions, setting stop loss orders, monitoring market conditions in real time and covering positions in a timely manner.
Trading method of perpetual contract liquidation
What is perpetual contract liquidation?
Perpetual contract liquidation means that when trading perpetual contracts, due to the low margin ratio, the position direction is opposite to the market trend, and the loss exceeds the margin principal, so the position is forced to be automatically closed behavior.
Trading method of perpetual contract liquidation
Normally, the trading method of perpetual contract liquidation is as follows:
1 . Short orders were liquidated
When investors short the perpetual contract, if the market price rises and the investor’s position direction is opposite to the market trend, the loss will increase. If the loss exceeds the margin principal, the investor will be liquidated.
2. Long orders are liquidated
Contrary to short orders, when investors are long perpetual contracts, if the market price falls, the direction of the investor’s position will be Contrary to market conditions, losses will increase. If the loss exceeds the margin principal, investors will also be liquidated.
How to avoid perpetual contract liquidation?
In order to avoid permanent contract liquidation, investors can use the following methods:
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