🚨Liquidation

What are liquidations?

Leverage is like strapping a rocket booster to your trading capital. It’s your fuel - the more you use, the faster and further you can go. But with increased power comes a greater risk of absolute catastrophic failure.

Liquidation happens when the market moves against your position, and your account balance falls below the minimum required level (called the maintenance margin) needed to keep your position open.

How it works

1. You open a position with leverage (borrowing trading power)

2. Market moves against you (price drops when you expected it to rise, or vice versa)

3. Your margin gets depleted as losses increase

4. When your margin falls too low, Moonshot automatically closes your position to prevent you from losing more than you deposited.

This protective measure ensures you don't end up owing money you don't have.

Tips to avoid liquidation

• Start small with leverage – Higher leverage means less wiggle room before liquidation.

• Monitor your margin ratio – Keep an eye on how close you are to the liquidation threshold. You want to take action before you're running on empty.

• Don't YOLO your life savings – Only use funds you can afford to lose

• Stay informed: Market volatility can quickly change your position's status

Remember: Even experienced traders may face losses. There's no shame in closing a position early to fight another day!

Margin Status Alerts: Your Early Warning System

Staying Informed

Moonshot keeps you updated on your position's health with real-time notifications:

• Warning - when margin falls below 50%: You'll see a caution alert on the Moonshot platform - this is your first heads-up that your position may need attention.

• Danger - when margin falls below 25%: A more urgent alert appears, signaling that you're approaching the critical threshold - a good time to take action.

• Liquidation - 0%: Liquidation process begins automatically.

Think of these alerts like warning lights - the earlier you address them, the more options you have. However, be aware that in volatile market conditions, these warnings can trigger in rapid succession within minutes or even seconds. You can add funds, reduce your position size, or close your position entirely to avoid automatic liquidation, but you may have very limited time to react before your margin status deteriorates further.

The notification system is designed to give you enough time to make informed decisions rather than being caught by surprise. Keep your notifications enabled when you have open positions!