What Is the Risk of Liquidation in a Leveraged Perpetual Swap?

Liquidation is the forced closure of a leveraged position by the exchange when the trader's margin balance falls below the maintenance margin level. This occurs when the market moves significantly against the trader's position.

The high leverage used in perpetual swaps magnifies price movements, making liquidation a constant and severe risk for traders who do not manage their collateral effectively.

What Is the ‘Maintenance Margin’ Level in Derivatives Trading?
Define ‘Maintenance Margin’ and Its Role in Leveraged Derivatives Trading
What Is a Margin Call in the Context of Futures Contracts?
What Is ‘Liquidation’ in Futures Trading?
How Do ‘Margin Calls’ Function in the Context of an Options Contract with an Institutional Counterparty?
What Is Maintenance Margin and Why Is It Crucial for Leveraged Crypto Derivatives?
What Is the Difference between ‘Initial Margin’ and ‘Maintenance Margin’?
Explain the Difference between ‘Initial Margin’ and ‘Maintenance Margin’