A liquidation happens when your margin balance falls below the required maintenance level. Dexari’s liquidation engine is designed to protect you from going negative, but it’s important to understand how it works and how to avoid it.

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What triggers a liquidation?

A position is liquidated if your margin (collateral) is no longer sufficient to cover potential losses. This usually happens when the market moves against your position and your margin balance drops below the maintenance margin requirement.
  • Maintenance margin: The minimum collateral required to keep your position open. If your margin falls below this, liquidation is triggered.
  • Liquidation price: The price at which your position will be force-closed to prevent further losses.

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What happens during liquidation?

  • Dexari will attempt to close your position at the best available price.
  • Any remaining margin after closing the position is returned to your account.
  • If the market is highly volatile or illiquid, you may lose your entire margin for that position, but you cannot go negative.
Liquidation can result in the loss of your entire margin for a position. Always monitor your margin and use stop loss orders to help manage risk.

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Tips to avoid liquidation

  • Use lower leverage to reduce risk.
  • Monitor your margin ratio and keep extra collateral in your account.
  • Set stop loss orders to limit potential losses.
  • Understand the risks of cross vs. isolated margin (see Margin and leverage).