the.com/liquidation
The market's way of asking if you really meant to bet the farm.
means The forced sale of assets or positions—turning what you hold into cash, often because you have to, not because you want to.
from From Latin 'liquidus' meaning fluid or clear, via 'liquidare,' to make clear or melt. The financial sense of settling debts by converting assets to cash emerged in the 1800s—the metaphor being that frozen, illiquid holdings get melted down into liquid, spendable cash. The brutal modern sense of forced liquidation, especially in trading, keeps that same image: your position gets 'melted' away whether you like it or not.
- forced exit
- exchange closes your position before you can
- margin math
- losses eat collateral until zero, then poof
- cascades
- one liquidation can trigger a chain of others
- fee twist
- exchanges often profit from your liquidation