Trading

Liquidation

Also called: liquidated · rekt

In shortThe forced closing of a leveraged position or loan when its collateral no longer covers the losses.

On futures exchanges your position is closed automatically at the liquidation price and you lose the margin. In DeFi lending, part of your collateral is sold when its value falls too close to the loan.

Big price moves often trigger waves of liquidations ("liquidation cascades") that push prices even further.