How much does AscendEX’s 5x leverage drop to liquidate the position?

AscendEX's 5x leverage drops to liquidate a trader's position when the price of the cryptocurrency drops below the liquidation price, calculated as the entry price divided by (1 plus the reciprocal of the leverage).

Nov 25, 2024 at 02:02 pm

How much does AscendEX's 5x leverage drop to liquidate the position?

AscendEX is a cryptocurrency exchange that offers a variety of services, including spot trading, margin trading, and futures trading. Margin trading allows traders to borrow funds from the exchange in order to increase their trading power. However, this also increases the risk of liquidation, which is when the exchange closes out a trader's position due to insufficient funds.

The liquidation price for a position is determined by the following formula:

Liquidation Price = Entry Price / (1 + (1 / Leverage))

For example, if a trader enters a long position at $10,000 with 5x leverage, the liquidation price would be:

Liquidation Price = 10,000 / (1 + (1 / 5)) = 8,333.33

This means that if the price of the cryptocurrency drops below $8,333.33, the exchange will liquidate the trader's position.

To avoid liquidation, traders must ensure that they have sufficient funds in their account to cover potential losses. This can be done by either depositing more funds or reducing their leverage.

Here are some tips for managing risk when trading with leverage:

• Use a stop-loss order to limit your losses in case the price of the cryptocurrency moves against you.
• Monitor your positions closely and be prepared to close them out if the price moves against you.
• Only trade with funds that you can afford to lose.
• Use leverage wisely. The higher the leverage, the greater the risk of liquidation.