What are auto-liquidations?
In Binance futures trading, auto-liquidations happen when a trader’s position is forcibly closed. This occurs when the margin balance is no longer sufficient to cover the position’s losses. The exchange does this to prevent the user from going into debt with the system.
If you’re starting out and want to trade futures safely, create your Binance account by clicking here and learn how to manage risk responsibly.
Why do auto-liquidations happen?
They usually occur due to:
- Excessively high leverage
- Sharp market movements against your position
- Insufficient margin to maintain the trade
- Lack of proper stop-loss or risk management
Understanding cross margin and isolated margin is key. Create your Binance account by clicking here and explore Binance’s educational tools.
How Binance calculates liquidation
Liquidation happens when the mark price reaches your liquidation price. Binance uses the mark price — which is less volatile than the last traded price — to avoid market manipulation and ensure fairer execution.
On the futures dashboard, you’ll see:
- Entry price
- Liquidation price
- Margin used
- Real-time PnL (profit and loss)
Before opening any position, create your Binance account by clicking here and set alerts to monitor your trades more accurately.
How to avoid getting liquidated
Best practices include:
- Use moderate leverage
- Always set a stop-loss
- Maintain healthy margin levels
- Don’t trade with 100% of your capital
- Monitor the mark price closely
Binance also offers a hedge mode, allowing you to hold both long and short positions at once. Create your Binance account by clicking here and try these features responsibly.
Binance’s liquidation system explained
Binance’s auto-liquidation system protects the platform’s integrity and users from systemic risks. If you get liquidated, your losses are limited to the amount of your margin — you don’t owe Binance.
With tools like the insurance fund and auto-deleverage (ADL) mechanism, the platform remains stable even in extreme market conditions.
Want to start safely? Create your Binance account by clicking here and begin with a demo account or small amounts.
Learn before taking high-risk trades
Futures can be profitable, but they also carry high risks. Study first, start slow, and never trade more than you can afford to lose. Binance offers free materials, video tutorials, and practice tools for beginners.
Take the first step with confidence: create your Binance account by clicking here and dive into the futures world with knowledge.
