Liquidation
a.k.a. Forced liquidation, Stop-out
Closing positions to turn them into cash, either by choice or forced by a broker when margin runs out.
In plain English
Closing positions to turn them into cash, either by choice or forced by a broker when margin runs out.
Liquidation simply means selling to raise cash. In leveraged trading it usually means the painful version: your losses ate your margin, so the broker or exchange closes your positions automatically.
Mass liquidations can feed on themselves. Forced selling pushes price down, which triggers more liquidations; crypto markets are especially known for these cascades.
Don’t be that stickman
Running maximum leverage so that a normal market wobble triggers a forced liquidation.
Keep this word for good
Your free Private Swap Lounge saves the terms you’ve learned and quizzes you on them. Portal under construction. Expected delivery date is December 01, 2026.