What Should you Know About Bybit Liquidation?

If you are looking to advance in the field of crypto trading then you should be familiar with a few major concepts, such as Bybit liquidation. Trading digital assets has its perks and benefits, however, it does come with risks and warning signs and as a crypto trader you should be prepared for it all.

Even though liquidation is not a pleasant thing to experience but it is important that you know about it so you can do your best to avoid it. Crypto trading can never be completely free of risks but if you have a good amount of information about the market and trading you can make the best possible decisions.

Therefore, as a crypto trader, regardless of your experience, here is what you should know about the concept of liquidation, liquidation price Bybit and a lot more.

What is Bybit Liquidation?

Liquidation is necessary for every exchange, especially focused on crypto trading. However, it is not a pleasant experience for any crypto trader.

By definition, liquidation is the closing of a position of a crypto trader. This is caused when the initial margin level hits the maintenance margin.

Liquidation is triggered when liquidation price is hit by mark price. These are all essential terms that you should be familiar with if you are interested in becoming a crypto trader.

What to Know About the Bybit Exchange?

Before we learn about liquidation price Bybit, you should know a few details about the Bybit exchange. It is one of the top peer-to-peer trading platforms in the crypto market.

It is known for offering remarkable and impressive customer service and charging one of the lowest fees in the market. It offers high liquidity to the users, which means the chances of market or crypto price volatility are low.

It has a user-friendly interface, which means it is suitable for crypto traders who are both experienced and inexperienced. It offers impressive bonuses to the users who opt for the platform to start crypto trading.

Another outstanding aspect of the Bybit exchange is that it has a custom-made mobile application that helps traders in keeping a track of the market and their positions conveniently. The mobile application also makes it easier for the crypto traders to trade while on the go.

What is Initial Margin?

If you want to learn about Bybit liquidation you should know about initial margin.

Initial margin is the amount that you need to use to open a position. This amount can be taken from the available margin and position open is according to the leverage you select.

For instance, if you want to open a position of $2,000 then the amount that you will be required to pay will be $200. It will be $2,000 with the 10x leverage, if that is what you chose for your position.

What is Maintenance Margin?

As the name suggests, maintenance margin is used to maintain your open position. It is the minimum margin level that is required to keep a trading position from closing. The minimum margin level can increase if the crypto traders increase their risk limit.

However, the lowest margin level on Bybit starts at:

• 0.5% for BTC
• 1% for EOS, ETH and XRP for perpetual contracts

Types of Liquidations

If you want to know about Bybit liquidation then you should also know the types of liquidations. There are two types, that are mentioned here in detail.

What are Partial Liquidations?

This type of liquidation reduces the overall contract value by trying to close the position partially, as the name suggests. In case of a partial liquidation, the system liquidates some of the difference between the maximum contract value of the lowered risk limit and current price’s contract value.

In case of partial liquidations, the system reduces the level of risk limits. In turn the level of required maintenance margin is also reduced. This causes the initial margin above the new rate of maintenance margin, which is reduced.

This helps the crypto traders to a great extent to not lose their complete position if there are any fluctuations in the crypto market.

What are Full Liquidations?

As the name suggests, this type of Bybit liquidation means the closing of a trader’s entire position. This happens when the level of the risk limit is at its lowest and mark price touches the liquidation price Bybit. In case of full liquidations, a trader loses the entire position margin.

Also Read: Trade Crypto on Spot Exchange with No Fees

Final Takeaways!

Bybit liquidation is an important concept that should be known by every crypto trader, whether they are trading for the first time or not. This can help them to understand what they can do to avoid liquidation. The basic details along with some of the important terms are mentioned above and as a new crypto trader you should have this information.