What to do if BitFlyer contract is liquidated

To avoid liquidation in BitFlyer contract trading, consider reducing leverage, increasing margin, utilizing stop-loss orders, and regularly monitoring positions.

Nov 09, 2024 at 01:27 pm

What to Do if BitFlyer Contract is Liquidated

When trading contracts on BitFlyer, there is always the risk of liquidation. Liquidation occurs when your contract position reaches a certain level of loss and the exchange automatically closes the position to prevent further losses. This can be a very stressful and frustrating experience, but it's important to remember that there are things you can do to protect yourself from liquidation and minimize the damage if it does happen.

Here are steps to take if your BitFlyer contract is liquidated:**

1. Understand why your contract was liquidated. The first step is to figure out why your contract was liquidated. This will help you avoid making the same mistake in the future. There are a few common reasons why contracts get liquidated:

Overtrading: This is when you trade with too much leverage. Leverage is a tool that can amplify your profits, but it can also magnify your losses. If you're not careful, you can quickly find yourself in a situation where your losses exceed your account balance causing a liquidation.

Insufficient margin: This is when your account balance is not sufficient to cover your losses. When you trade contracts, you need to maintain a certain amount of margin in your account. This margin is used to cover any losses that you may incur. If your account balance falls too low, the exchange will automatically liquidate your position.

Unexpected market movements: This is when the market moves against you very quickly. This can happen even if you're using a stop-loss order. If the market gaps down, your stop-loss order may not be executed and you could end up losing more than you intended.

2. Reduce your leverage. One of the best ways to avoid liquidation is to reduce your leverage when you start contract trading. Leverage is a double-edged sword. It can amplify your profits, but it can also magnify your losses. If you're not careful, you can quickly find yourself in a situation where your losses exceed your account balance causing a liquidation. A good rule of thumb is to start with a low leverage and increase it gradually as you gain more experience.
3. Increase your margin. Another way to avoid liquidation is to increase your margin. Margin is the amount of money that you have in your account to cover potential losses. The more margin you have, the less likely you are to be liquidated. If you're concerned about the risk of liquidation, you should increase your margin by depositing more funds into your account.
4. Use stop-loss orders. A stop-loss order is an order to sell your contract at a specific price. This can help you limit your losses if the market moves against you. Stop-loss orders are not foolproof, but they can be a valuable tool for managing your risk.
5. Monitor your positions regularly. It's important to monitor your positions regularly to ensure they are not at risk of liquidation. You should also be aware of any news or events that could affect the market and cause your positions to move against you. If you're not able to monitor your positions regularly, you should consider using a stop-loss order to protect yourself from liquidation.
6. Accept that losses are a part of trading. Even the most experienced traders lose money from time to time. It's important to accept that losses are a part of trading and not to get discouraged when they happen. If you find yourself getting liquidated, don't let it discourage you from continuing to trade. Learn from your mistakes and move on.
7. Consider hedging your positions. Hedging is a strategy that can help you reduce your risk of liquidation. Hedging involves taking opposite positions in two different markets. This can help you offset any losses that you may incur in one market with gains in the other market.
8. Don't panic sell. If your contract is liquidated, it's important to avoid panic selling. Panic selling is when you sell your assets quickly and at a loss in order to avoid further losses. This is often a mistake, as it can lock in your losses and prevent you from recovering from the liquidation. If you're liquidated, take some time to assess the situation and make a plan for how you're going to move forward.