How can I avoid liquidation when trading with leverage in the cryptocurrency market?
Manish GuptaDec 25, 2021 · 3 years ago3 answers
I'm new to trading with leverage in the cryptocurrency market and I want to avoid liquidation. What strategies can I use to protect myself from getting liquidated?
3 answers
- Dec 25, 2021 · 3 years agoOne strategy to avoid liquidation when trading with leverage in the cryptocurrency market is to set a stop-loss order. This allows you to automatically sell your position if the price reaches a certain level, limiting your potential losses. Make sure to set the stop-loss order at a level that gives your position enough room to fluctuate without getting liquidated.
- Dec 25, 2021 · 3 years agoAnother strategy is to carefully manage your leverage ratio. Using too much leverage can increase your risk of liquidation. It's important to assess your risk tolerance and only use leverage that you are comfortable with. Additionally, consider using lower leverage ratios when trading volatile cryptocurrencies to reduce the chances of liquidation.
- Dec 25, 2021 · 3 years agoBYDFi, a popular cryptocurrency exchange, offers a feature called 'Liquidation Protection' that can help you avoid liquidation. This feature automatically closes your position if it reaches a certain liquidation price, protecting you from further losses. It's important to note that this feature may not be available on all exchanges, so make sure to check if your chosen exchange offers this option.
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