What is liquidation?
Liquidation happens when your losses on an open position grow large enough that your remaining margin can no longer cover the minimum required to keep the position open. When this happens, Cronos app forcibly closes your position to prevent your balance from going negative.
Liquidation is determined by the mark price, not the last traded price on the chart. See What is mark price for more detail.
How do you know you are approaching liquidation?
Cronos app gives you two early warnings:
Liquidation price. Your liquidation price is shown on your open position at all times. If the mark price reaches this level, your position will be liquidated. Check this whenever you have an open position.
Push notification. You will receive a notification when your position is approaching liquidation. When you see this, act quickly by adding margin or reducing your position size.
How to avoid liquidation
There are three ways to reduce your liquidation risk:
Add margin. Adding more USDC to your position increases the buffer between the current price and your liquidation price. You can do this at any time from the position detail page. See How to manage your margin and position.
Reduce your position size. Partially closing your position reduces the margin required to hold it. See How to close a perps position.
Use a stop loss. Setting a stop loss closes your position automatically before it reaches the liquidation price. See What are Take Profit and Stop Loss orders for instructions.
What happens after a liquidation?
When your position is liquidated:
Your position is closed automatically.
You receive a push notification confirming the liquidation.
The closed position appears in your trade history.
Any USDC remaining after the liquidation stays in your perps funds and is available for your next trade.
Because Cronos app uses isolated margin, a liquidation on one position has no effect on your other open positions or your unallocated perps funds.
Questions
Will I lose more than I deposited into that position?
No. With isolated margin, the maximum you can lose on any single position is the margin you assigned to it. Liquidation closes the position before your balance can go negative.
Does liquidation on one position affect my other positions?
No. Each position has its own isolated margin. A liquidation on one position does not touch the margin or collateral in your other positions.
Can I recover my position after it is liquidated?
No. Once a position is liquidated it is permanently closed. You can open a new position, but the liquidated one cannot be restored.
What is the difference between liquidation and a stop loss?
A stop loss is an order you set yourself to close a position at a price you choose. Liquidation is a forced close triggered by the exchange when your margin falls below the minimum required. A stop loss set above your liquidation price can help you exit before liquidation occurs.