What to do if Upbit contracts are liquidated

If your Upbit contracts are liquidated, assess the situation, determine the cause, adjust your trading strategy to manage risk, recover funds and manage losses, and learn from the experience to prevent future liquidations.

Nov 12, 2024 at 01:28 am

What to do if Upbit Contracts are Liquidated

Introduction

Liquidation is an involuntary closing of a leveraged position when it is no longer able to meet the initial margin requirements. It occurs when the value of the underlying asset falls below a certain level, causing the trader to incur a loss greater than their initial investment.

On Upbit, contracts are subject to liquidation if the position's Maintenance Margin Ratio (MMR) falls below the specified level. The MMR is calculated by dividing the total position equity by the total margin used.

Steps to Take if Your Upbit Contracts are Liquidated

1. Assess the Situation

• Determine the specific contract that was liquidated and the reason for the liquidation.
• Check your account balance to understand the extent of the loss and any remaining funds.
• Review the contract's liquidation history to identify any potential mistakes or oversights that contributed to the event.

2. Determine the Underlying Cause of the Liquidation

• Insufficient Margin: Ensure that you have provided sufficient margin to cover potential market fluctuations.
• High Leverage: Consider reducing the leverage used on your contracts to mitigate the risk of liquidation.
• Unfavorable Market Conditions: Volatility, slippage, and sudden price movements can trigger liquidations.
• Technical Issues: Ensure that your trading system is functioning properly and that there are no connectivity or other technical issues.

3. Adjust Your Trading Strategy

• Re-evaluate your trading approach and risk management practices.
• Consider setting more conservative stop-loss orders to limit potential losses.
• Reduce the amount of leverage used to minimize the impact of market movements.
• Monitor market conditions closely and adjust positions as needed to avoid future liquidations.

4. Recover Funds and Manage Losses

• If a portion of your funds remain after liquidation, withdraw them as soon as possible.
• Contact Upbit's customer support if you believe the liquidation was an error.
• Explore options for replenishing your trading capital or adjusting your trading style to minimize future losses.

5. Learn from the Experience

• Analyze the liquidation event thoroughly to identify the factors that contributed to it.
• Seek education and training to develop a better understanding of risk management in contract trading.
• Join trading communities or consult with experienced traders for insights and support.

Additional Tips

• Monitor Your Positions Regularly: Check your contracts frequently to track their MMR and ensure they are meeting the required levels.
• Set Up Notifications: Enable alerts to notify you when your MMR falls below a certain threshold.
• Use Risk Management Tools: Implement measures such as stop-loss orders, trailing stops, and position sizing to manage risk effectively.
• Practice Discipline: Avoid impulsive trading and stick to a well-defined trading plan.
• Stay Updated: Keep abreast of market news, economic indicators, and technical analysis to make informed trading decisions.