> For the complete documentation index, see [llms.txt](https://blackboard-fi.gitbook.io/blackboard-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://blackboard-fi.gitbook.io/blackboard-docs/trade/liquidations.md).

# Liquidation

When your margin runs out, the system closes your position. Understanding liquidation is the most important part of leveraged trading.

## What Happens

Unrealized losses erode your margin. When the **margin ratio hits the maintenance level**, the system force-closes your position at market price.

## Liquidation Price

Displayed when you open a position. The factors:

* **Leverage**: Higher leverage = liquidation price closer to entry
* **Margin mode**: Cross margin pushes it further away
* **Added margin**: Adding margin in isolated mode moves it further

### Example (BTC-PERP Long)

| Leverage | Entry Price | Approx. Liquidation |
| -------- | ----------- | ------------------- |
| 5x       | $100,000    | \~$80,000           |
| 10x      | $100,000    | \~$90,000           |
| 25x      | $100,000    | \~$96,000           |

{% hint style="info" %}
Exact liquidation prices depend on maintenance margin rates, fees, and funding. Always check the trading screen.
{% endhint %}

## The Process

1. **Warning**: Notification when margin ratio approaches danger
2. **Maintenance margin reached**: Ratio hits 100%
3. **Automatic liquidation**: Position closed at market
4. **Remaining margin returned**: Whatever is left goes back to your account

## ADL (Auto-Deleveraging)

In extreme conditions where normal liquidation fails, **Auto-Deleveraging** may occur. On Hyperliquid's HIP-3 markets, ADL is a last resort: triggered only when account value goes negative and both normal liquidation and the HLP backstop have been exhausted. Other protocols apply their own backstop mechanisms.

* Counterparties selected by: highest profit → highest leverage → largest position
* Extremely rare

## How to Avoid Liquidation

### 1. Low leverage

5x or below when starting out.

### 2. Stop losses

Set a Stop Loss on every position. It closes you out before liquidation.

### 3. Monitor margin

Check your margin ratio on the dashboard.

### 4. Add margin

In Isolated mode, add margin to push the liquidation price further.

### 5. Size appropriately

Keep positions proportional to your total capital.

## Next Steps

* [Margin & Leverage](/blackboard-docs/trade/margin-and-leverage.md) — Margin modes
* [Order Types](/blackboard-docs/trade/order-types.md) — Stop-loss and take-profit
* [Fees](/blackboard-docs/resources/fees.md) — Liquidation fees