What Is the Difference between a ‘Soft’ and ‘Hard’ Liquidation?

A 'soft' liquidation is a more gradual process, often involving an automated deleveraging mechanism where a portion of the user's position is closed to bring the margin back above the maintenance level. A 'hard' liquidation involves the immediate and complete closure of the entire leveraged position once the maintenance margin is breached.

Soft liquidations are generally preferred as they minimize the impact on the market and the user's losses.