Trading glossaryReviewed 16 July 2026
Definition
Liquidation is the forced reduction or closure of positions when account equity, margin, or another risk condition breaches required thresholds.
In market context
A risk engine may liquidate one position or several, using current available prices and an order determined by product rules. Warnings are not guaranteed to provide enough time to add funds or close manually, especially during gaps, outages, or rapid moves. Liquidation can realize losses, incur fees, and leave less equity than an earlier account display suggested during forced execution.
Risk context
Forced execution prioritizes restoring account compliance, not obtaining the user’s preferred price or preserving a particular position.
Source
Use the primary source for fuller regulatory or market context.