> For the complete documentation index, see [llms.txt](https://hashhedge.gitbook.io/hashhedge-user-guide/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hashhedge.gitbook.io/hashhedge-user-guide/rules/liquidation.md). # Liquidation and Margin Liquidation is the most important risk to understand when trading with leverage. This explains what it is and how to avoid it. *** ## What liquidation is When you open a leveraged position, part of your balance is set aside as **margin** to back it. If the market moves against you, your losses eat into that margin. When the margin can no longer cover the position (it falls below the **maintenance margin** the platform requires), the position is **liquidated**: closed automatically at a loss. ## Est. Liq. Price The terminal shows an **Est. Liq. Price** (estimated liquidation price) for each position. If the Mark Price reaches that level, the position is liquidated. The **Margin Ratio** column tells you how close you are: the higher it climbs, the closer the liquidation.

Est. Liq. Price and Margin Ratio in the positions panel

## How leverage and margin mode affect it * **Higher leverage → closer liquidation.** With a small margin behind a large position, a smaller price move wipes it out. Lower leverage moves the liquidation price further away. * **Isolated margin**: only that position's margin is at risk, and it has its own liquidation price. One bad trade can't drain the rest of your account. * **Cross margin**: your whole account balance backs the position, so the liquidation price is further away, but a liquidation can affect everything. ## How to avoid it * Use **modest leverage**: just because 5x is available doesn't mean you should max it. * Always set a **Stop Loss** at a price *before* your Est. Liq. Price, so you exit on your terms, not the system's. * Don't commit 100% of your margin to one position. * Watch the **Margin Ratio** and **Est. Liq. Price** while a trade is open. *** {% hint style="warning" %} For a funded or Challenge account, a liquidation is a large, sudden loss that can breach your **daily or total loss limit** and fail the account. Avoiding liquidation is part of staying within the rules. See [Risk management](/hashhedge-user-guide/rules/risk-management.md) and [Rules, stages and loss limits](/hashhedge-user-guide/rules/challenge-rules.md). {% endhint %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://hashhedge.gitbook.io/hashhedge-user-guide/rules/liquidation.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.