What Is a 'Stop-Loss' Order and How Does It Prevent Liquidation? ⎊ Path

What Is a ‘Stop-Loss’ Order and How Does It Prevent Liquidation?

A stop-loss order is an instruction to automatically close a position when the market price reaches a specified price. It prevents liquidation by ensuring the position is closed before the margin falls to the maintenance level.

By setting a stop-loss, the trader pre-emptively limits their loss, preserving the remaining margin.

How Can a Trader Use Stop-Loss Orders to Manage the Increased Margin Call Risk from High Leverage?

How Does a ‘Stop-Loss’ Order Help Manage the Risk of Liquidation?

How Does a “Stop-Limit Order” Combine the Features of a Stop Order and a Limit Order?

How Does the Margin Call Price Relate to the Liquidation Price?

How Does a ‘Stop-Loss Order’ Help Mitigate the Risks Associated with High Leverage?

What Is the Difference between a Stop-Loss Order and a Stop-Limit Order?

What Specific Action Is Triggered When the Margin Balance Falls below the Maintenance Margin Level?

What Is the Benefit of a “Trailing Stop” Order in Preventing Liquidation?