Risk Warning
Margin trading refers to the practice of magnifying your actual funds by borrowing assets. You must return the borrowed assets within a specified period and pay interest on the borrowed funds. While margin trading can allow for significant gains with minimal investment, it also entails increased risk of losses when the market moves against you.
The risk rate is a key metric for assessing the liquidation risk of your margin account. It represents the ratio of your total assets to borrowed assets. A higher risk rate indicates a lower proportion of borrowed assets, making the account less susceptible to liquidation. Conversely, a lower risk ratio indicates a higher level of risk in your margin account.
When the risk rate falls below the forced liquidation rate, the system will liquidate your position, using all available assets to repay the borrowed amount.
Therefore, it is important to be aware of the risks of leverage trading and to avoid heavy trading with high leverage, preventing potential forced liquidation or even bankruptcy during extreme market conditions.
How to reduce the risk of forced liquidation?
1. Use leverage wisely and control position size
Example: In BTC/USDT leveraged trading with a maximum 10x leverage, if you have 10 USDT, you can borrow up to 90 USDT. To lower risk, borrow only 40 USDT (5x leverage) based on your risk tolerance.
2. Set stop-loss orders
When your risk rate approaches the forced liquidation rate, reduce your position size or set stop-loss orders to minimize liquidation risk.
3. Maintain a high risk rate to avoid liquidation by market fluctuation
If you receive a risk alert email, promptly add funds to your margin account to ensure your risk rate stays above the liquidation threshold.
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