How to Manage Margin Liquidation Risk
Understand when and how margin liquidation occurs, and learn strategies to prevent forced closure of your positions.
Understand Liquidation Triggers
Margin liquidation is triggered when your margin ratio falls below the maintenance margin requirement. This happens when the value of your collateral drops (market moves against you) or your loan interest accumulates beyond what your collateral can support.
Check Your Liquidation Price
Navigate to Margin Account > Risk Score to view your estimated liquidation price for each borrowed position. This tells you exactly how far the market needs to move before your account reaches liquidation. The system also provides a 'Liquidation Projection' showing the impact of different price scenarios.
Receive Warning Notifications
Midas sends progressive warnings as your margin ratio decreases. You will receive alerts when your ratio crosses predefined thresholds: a caution alert when approaching risk, a warning when close to danger, and a final urgent alert before liquidation. Enable push notifications and email alerts in your notification settings.
Add Collateral to Prevent Liquidation
If your margin ratio is declining, transfer additional assets from your Spot wallet to your Margin account. This increases your collateral value and pushes the liquidation price further away. You can also partially repay loans to reduce your obligations and improve the ratio.
Use Stop-Loss Orders Proactively
Set stop-loss orders on your margin positions to automatically exit before the liquidation price is reached. A stop-loss triggered at a controlled level is far better than a forced liquidation, which may execute at unfavorable prices due to market volatility and incur additional liquidation fees.
Risk Disclaimer
Margin trading involves significant risk. Leveraged positions can result in losses exceeding your initial collateral. You are responsible for repaying all borrowed funds plus interest regardless of trading outcomes. This tutorial is for educational purposes only and does not constitute financial advice.