How does account liquidation work in the world of digital currencies?

3 answers

• Sameer HassanNov 05, 2020 · 5 years ago
  When it comes to account liquidation in the world of digital currencies, it refers to the process of closing out a user's positions and converting them into cash. This typically happens when the user's account balance falls below a certain threshold, triggering an automatic liquidation. The platform will sell off the user's assets at the prevailing market price to cover any outstanding debts or losses. It's important to note that account liquidation is a risk management measure taken by exchanges to protect themselves and other users from potential losses. So, it's crucial for traders to manage their risk effectively to avoid account liquidation.
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• Gu WeiJan 14, 2021 · 4 years ago
  Account liquidation in the world of digital currencies can be a nerve-wracking experience for traders. It happens when the value of a trader's positions drops to a point where the exchange automatically closes their positions to prevent further losses. This can be triggered by factors such as margin calls or reaching a certain threshold of loss. The exchange will then sell off the trader's assets to cover the losses, and the remaining funds will be returned to the trader's account. It's important for traders to closely monitor their positions and set up appropriate risk management strategies to avoid account liquidation.
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• Computer_EnthusiastFeb 02, 2023 · 2 years ago
  At BYDFi, account liquidation works slightly differently. When a trader's account balance falls below the required margin, the exchange will automatically close out the trader's positions to cover the losses. However, BYDFi has implemented a unique feature called 'Partial Account Liquidation' which allows traders to partially close their positions and retain a portion of their assets. This feature provides more flexibility and control for traders, allowing them to manage their risk more effectively. It's important for traders to familiarize themselves with the specific account liquidation rules and features of the exchange they are using to avoid any surprises.
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