How to Avoid Liquidation

[Shaf]

People make a lot of money trading cryptocurrency, while a lot of them a lot of money while trading. It depends on things like how skilled you are, the type of asset you are trading, your risk management strategy and luck.

What is Liquidation? Coindesk describes it as "a loss of funds that occurs when a trader has insufficient funds to keep a leveraged trade open".

On leverage trading, you can borrow money from the exchange to increase the capital you trade with. Before giving you this money though, you need to deposit some money as collateral. If the trade goes in the opposite direction and your collateral is insufficient, you lose your collateral totally.

One way to avoid this is by using the right leverage. Cryptocurrency is volatile enough. Use lower leverage to lower your risk.

Another way is to use stop loss. This tells the exchange to close your position at a certain point once the trade is going into loss. This way you only use a small amount of money.

If you do not have the right skills, trading with leverage is very risky. Take time out to learn first before risking your money.

 

[Sotherefore]

There is absolutely no way this can be completely avoided , because there are many reasons why people may be liquidated when they are on a trade. Well I could say that the best way to completely avoid liquidation when you are trading the volatile market is to have a proper idea of what you are doing that plays an important factors in determining your possibility of trading and coming out with high success rate.

Improper use of stop-loss could be another reason why people may be liquidated when they are on a live trade. which indicate that you should know when to apply a stop loss . Normally it is not always advised for you to consider trading without proper stop loss and other tools that have been invented by a trading platform to prevent you from having liquidation when you are on a live trade. .

The use of no liquidation strategy is very important.