Market structure · Chapter 9 of 31
What are liquidations?
What happens when a leveraged position is force-closed, and why cascades of liquidations can accelerate sharp moves.
When a trader uses leverage, the exchange requires a minimum margin to keep the position open. If the price moves far enough against them, the position is force-closed to prevent further loss. That forced close is a liquidation.
Why cascades happen
A liquidation is itself a market order in the opposite direction of the position. A wave of long liquidations sells into a falling market, pushing price lower, which triggers more liquidations. This feedback loop is a liquidation cascade.
What it signals
Clusters of liquidations mark where leveraged traders were forced out. Large one-sided liquidation events often coincide with sharp, fast moves and can flush out crowded positioning before a market stabilizes.
How to read it here
We surface liquidation events and their size as they happen. Use them to understand the pressure behind a sudden move, not to predict the next one.
Now watch this signal update in real time across the market.
See it liveEducational content, not financial advice.