When a leveraged position moves against the trader far enough that the margin falls to the maintenance level, the exchange closes it automatically. This is not a choice or a margin call in the traditional sense — it is executed by the venue's risk engine, and the remaining collateral is generally consumed in the process.
Liquidations cluster, and that is what makes them a market event rather than an individual one. Positions opened at similar prices with similar leverage share similar liquidation levels, so when the price reaches that band the forced orders arrive together, push the price further in the same direction, and trigger the next band. Cascades of this kind account for a large share of the sharpest moves in crypto.
Can I lose more than my margin in a liquidation?
On most major venues no — insurance funds absorb the shortfall, and positions are closed before the balance goes negative. In extreme gaps some exchanges apply socialised losses or auto-deleveraging instead.
Last updated October 17, 2026