Introduction

This article explains what liquidation means in leveraged trading on Coinlocally Futures, why it happens, and how you can reduce the risk of being liquidated. Understanding liquidation is essential for managing risk and protecting your capital in volatile markets.

Understanding Liquidation

Liquidation occurs when a trader’s leveraged position can no longer meet the required maintenance margin. Because leverage amplifies both profits and losses, even small price movements can cause a trader’s equity to drop rapidly.

When losses exceed the maintenance margin, the system automatically closes the position to prevent the account from falling into a negative balance.

When Liquidation Happens

A forced liquidation occurs when the market moves against your leveraged position and your losses reach a level where your margin ratio becomes too high.

Process overview:

• You open a long or short leveraged position
• The market moves against your position
• Losses increase and a margin call is triggered
• If you do not add funds in time
• The system liquidates your position automatically

The higher the leverage, the faster liquidation can occur.

Tips to Reduce the Risk of Liquidation

Using Stop‑Loss Orders

A Stop‑Loss automatically closes your position at a predefined price, helping you limit potential losses during volatile market movements.

Using Lower Leverage

High leverage increases liquidation risk. Lower leverage gives your position more room to survive market fluctuations.

Avoiding Additional Contracts in Losing Positions

Adding more contracts to a losing position increases your liquidation price and raises your overall risk.

Monitoring the Margin Ratio

Your margin ratio is calculated as:

Maintenance Margin ÷ Margin Balance

• At 100%, your position becomes eligible for liquidation
• If your margin balance drops below the maintenance margin, liquidation occurs

You can use the Coinlocally Futures Liquidation Price Calculator to see how adding funds lowers your liquidation price.

Additional Notes

• The liquidation price shown on the order page is for reference only.
• Actual liquidation price may vary due to market fluctuations and other factors.
• Price differences during liquidation may result in asset losses.
• When liquidation occurs, an Insurance Clearance fee is deducted and added to the Insurance Fund.
• Coinlocally is not responsible for notification failures caused by local restrictions, service providers, or device issues.
• Coinlocally uses Mark Price—not Last Price—to trigger liquidation and prevent unfair liquidations.
• Under Isolated Margin, liquidation occurs when position margin reaches the maintenance margin level.
• Under Cross Margin, liquidation occurs when available balance reaches zero and position margin reaches the maintenance margin level.

Common Issues

• Confusion between Mark Price and Last Price
• Expecting liquidation to match the displayed reference price exactly
• Adding to losing positions and unintentionally raising liquidation price
• Using high leverage without monitoring margin ratio

Feeling lost?

If you're unsure why your position was liquidated or need help understanding your liquidation price, our support team is available 24/7 to guide you.

Updated on: 01/13/2026