The forced closing of a leveraged position when losses reach a threshold where the trader's margin can no longer support the position. A critical risk in futures trading.
Liquidation
Related Terms
Leverage
The use of borrowed funds to increase a trading position beyond what would be available from capital…
Margin Trading
Trading with borrowed funds from a broker or exchange, allowing positions larger than the trader's a…
Stop Loss
An order that automatically closes a position at a predetermined price to limit potential losses. A …
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