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What Is Liquidation in Crypto Trading?
Understand how forced position closures work in margin and futures markets, and learn practical ways to manage liquidation risk.
How Liquidation Protection Works
Real-Time Margin Alerts
Get instant notifications when your margin ratio approaches liquidation thresholds.
Partial Liquidation Engine
Only the portion needed to restore margin is closed, preserving the rest of your position.
ADL Protection Reserve
A $500,000 reserve, launched on July 18, 2026, reduces cases where profitable positions are auto-deleveraged.
Adjustable Leverage Limits
Set custom leverage caps per position to match your risk tolerance and strategy.
Forced Position Closure
When your collateral no longer covers potential losses, the exchange sells your position to prevent negative balance.
Common Questions
To liquidate means the exchange automatically closes your leveraged position when your margin falls below the required maintenance level. It's a risk-control mechanism that prevents your account balance from going negative. The exchange sells your collateral to cover the borrowed funds and any losses.
Your liquidation price is the market price at which your position will be forcibly closed. It's calculated based on your entry price, leverage, and maintenance margin requirement. You can view your liquidation price in real time on the EVEDEX trading dashboard before opening any position.
Use lower leverage, add more collateral to increase your margin buffer, set stop-loss orders, and monitor your positions during volatile periods. Partial liquidations on EVEDEX also help by only closing enough of your position to restore healthy margin.
Liquidation only occurs in leveraged products like futures, perpetuals, and margin trading. Spot trading doesn't involve borrowed funds, so there's no liquidation risk—you simply own the asset outright and can hold it indefinitely regardless of price movement.
Yes, a small liquidation fee is deducted when a position is force-closed. The exact percentage is listed in the fee schedule and varies by contract type and leverage tier.