In crypto, liquidation is when your leveraged position gets forcefully closed due to running out of funds. Imagine using borrowed money to make a bigger trade (leverage). If the market moves against you and your account value shrinks, you might get liquidated. The exchange will then automatically sell your assets (crypto or collateral) to repay the loan, often at a bad price during volatile times. This can be brutal because leverage amplifies losses, and you have no control over the forced sale. To avoid this, understand leverage risks, use stop-loss orders to limit losses, and maintain a healthy amount of capital in your account.
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