What is liquidation

Liquidation is the close a trader did not place. A leveraged position posts margin, which is a deposit against the possible loss. If the loss eats that deposit down to the venue's line, the venue closes the position and takes the margin. There is no phone call. The price of the close is whatever the book can fill, and it can be worse than the line on the screen if the market is moving fast.

Leverage sets how close that line is. At 20x, a move of about 5 percent against the position is enough to erase the margin, before fees. At 5x, the same wipeout takes a move of about 20 percent. HTX's Marriott perpetual lists a ceiling of 20x. The ceiling is the most the venue says it allows. A trader can use less. The listing is here: https://cryptokeymedia.com/news/htx-marriott-perpetual

Isolated margin and cross margin decide what else can be taken. Isolated means only the coins posted to that one contract are at risk. Cross means the rest of the futures wallet can be pulled in to delay the close, and can be lost if the close comes anyway. A trader who thought one small position was the whole risk, and had the account set to cross, finds out at the liquidation. The setting is on the trading page. The announcement of a new contract rarely repeats it.

A liquidation prints as volume and as a drop in open interest. The forced close is a trade, so volume rises. It is also a closed position, so open interest falls. A cascade is that event happening to many accounts at nearby prices. One close pushes the price, the next account hits its line, and that close pushes the price again. The Ethereum account board that showed 75.2 percent of accounts long is the kind of crowd a down move would meet. The percentage is accounts, not a schedule of liquidations. It says the crowd is leaning one way.

The insurance fund, where a venue has one, pays the loss if the position is closed beyond the point where the margin covers it. If the fund is empty, some venues socialize the loss to the winning side. That is the difference between a close that costs the loser their margin and a close that also costs the winners. The rule is in the venue's documents. It is not in the leverage number on the banner.

A liquidation on a perpetual is not a margin call at a stock broker, and it is not a loan default in the mortgage sense. A broker may ask for more cash and give a day. A crypto venue closes. A mortgage default is a missed payment on a house. The word is the same. The clock is not. Crypto Key Media's mortgage note is about home loans. This page is about futures margin. They should not be read as one market.

Nothing here says a trader should add margin or close early. Those are decisions. The fact is the line. Once the mark price crosses it, the position is the venue's to close, at the price the book gives, and the margin is gone. Adding margin before that line moves the line. After it, there is no position left to add to.

What comes next, on any new contract, is the maintenance margin on the live page, not the maximum leverage in the announcement. The announcement says how large the position can be. The maintenance margin says how close the wipeout sits. Liquidation is that wipeout. It is the trade the trader did not type.