Traders Window
Crypto liquidations: what they are and how to read them
A liquidation is the exchange closing a leveraged position because the trader's margin can no longer cover the loss. Big waves of them move the market.
How a liquidation happens
When you open a leveraged position, you put down margin as collateral. If the price moves against you far enough that your margin falls below the maintenance level, the exchange closes the position for you at market. That forced order is a liquidation.
The higher the leverage, the smaller the move it takes. As a rough guide, a 10× position is liquidated after a move of a bit less than 10% against it, and a 50× position after a bit less than 2%.
Why liquidations cascade
A liquidated long is a forced sell; a liquidated short is a forced buy. When many traders use similar leverage at similar prices, one wave of forced orders pushes price into the next group's liquidation levels, and so on. That's how a normal pullback becomes a sharp wick in seconds.
Reading liquidation data
- Long liquidations pile up in sharp drops, short liquidations in sharp rises.
- A large spike often marks a local exhaustion point, because the forced sellers or buyers are now gone.
- Market-wide totals over the last hour tell you whether the whole market is being flushed or just one coin.
One caveat about Binance data: the public liquidation stream reports at most one liquidation per second for each contract, the largest one. Totals built from it are a floor, not the full amount.
Your own distance to liquidation
The number that matters most is how far the price can move before your position is closed. Distance in percent is simply the gap between the mark price and your liquidation price, divided by the mark price.
Liquidations in Traders Window
A LIQ badge appears on a coin when more than $100K is liquidated there in 5 minutes, with L or S for the side. The market row shows the last hour across all of Binance Futures. With a read-only account connected, each position shows its distance to liquidation, turning amber and then red as it gets close, with an urgent alert at your threshold.
For information only, not financial advice.