How to Reduce the Risk of Forced Liquidation?

In NewCoin perpetual futures trading, forced liquidation (also known as "getting liquidated") occurs when the account’s margin ratio falls below the maintenance margin requirement, prompting the system to automatically close positions to control risk. To help users effectively manage risk and avoid forced liquidation, we have compiled the following practical recommendations:

1. Choose Lower Leverage Higher leverage magnifies the impact of even small price movements, which can quickly deplete your margin. Beginners are advised to use 1–5× leverage. Experienced traders may gradually increase leverage based on their risk tolerance, but excessive leverage should always be avoided.

2. Maintain Sufficient Available Margin Keeping extra funds in your account as a buffer significantly reduces the likelihood of approaching the liquidation line. When the risk ratio rises, adding margin in time can effectively protect your positions.

3. Set Stop-Loss Orders Place stop-loss orders when opening a position. If the price moves against you, the system will automatically close the position to limit losses, preventing further declines that could trigger forced liquidation.

4. Avoid Full-Margin Trading Do not allocate all available margin to a single position. Properly control the proportion of each position (e.g., no more than 20–30% of total capital) to diversify risk.

5. Avoid Trading During High-Volatility Periods Price swings are often extreme during major economic data releases, significant news events, or market open/close times, drastically increasing liquidation risks. Consider reducing position sizes or staying观望 during such periods.

6. Focus on Mark Price Rather Than Last Traded Price NewCoin’s liquidation mechanism is triggered based on the Mark Price (fair price), not the last traded price. Even if short-term trading prices show abnormal volatility, liquidation risk remains lower as long as the mark price remains relatively stable.

7. Avoid Adding to Losing Positions Continuously adding margin to a losing position rapidly increases the risk ratio and easily pushes it toward the liquidation line. Stick to your trading plan and consider adding to winning positions rather than averaging down on losing ones.

8. Use Partial Entry and Take-Profit Strategies Building positions in stages and taking profits gradually can smooth out costs, reduce concentration of risk, and is generally more stable than entering a full position all at once.

Important Reminder: Perpetual futures trading involves high risks. Forced liquidation may lead to partial or total loss of margin. Trade rationally according to your personal risk tolerance. We recommend using tools provided by NewCoin, such as risk ratio alerts and position calculators, for better risk management.