How To Avoid Liquidation In Delta Exchange
Avoiding liquidation on Delta Exchange (or any crypto derivatives platform) is crucial for preserving your capital, especially when trading margin or leveraged products like perpetual contracts or options. Here’s how to reduce your risk of being liquidated:
✅ How to Avoid Liquidation on Delta Exchange
1. Use Lower Leverage
- The higher the leverage, the closer your position is to liquidation.
- Stick to 2x–5x leverage if you’re new or trading volatile assets.
- Example: With 10x leverage, a 10% market move against you can wipe out your margin.
2. Set a Stop-Loss
- Always use a stop-loss order to exit before reaching your liquidation price.
- Helps you control risk and reduce emotional decisions.
3. Monitor Margin Ratio Closely
- Keep an eye on your Maintenance Margin Ratio on Delta Exchange.
- If this ratio gets too high, you’re getting close to liquidation.
4. Add Margin to Strengthen Your Position
- If your position is close to liquidation, you can add more collateral (margin) to lower your liquidation price.
- This gives your trade more breathing room during volatility.
5. Avoid Overexposure
- Don’t put all your capital into one trade.
- Risk only a small percentage (e.g., 1–2%) of your account on each position.
6. Use Isolated Margin Instead of Cross Margin
- Isolated margin limits the risk to that specific position.
- Cross margin uses your entire account balance as collateral, increasing total risk.
7. Avoid Trading During High Volatility (Unless Skilled)
- Liquidations happen often during news events or sudden spikes/dumps.
- If you’re not experienced, avoid opening new trades around major economic announcements or crypto events.
Key Definitions
| Term | What It Means |
|---|---|
| Leverage | Borrowed funds that amplify gains/losses |
| Liquidation | Forced closure of your position due to low margin |
| Stop-Loss | Pre-set price where a trade closes to limit losses |
| Isolated Margin | Margin used only for one position |
| Cross Margin | Shared margin across all open positions |
Final Tip:
📈 Have a trading plan and stick to it. Emotional decisions and revenge trading increase liquidation risk.