Glossary · Execution and risk
Liquidation and maintenance margin
A position is liquidated when its collateral falls below the maintenance margin the venue requires. The venue then closes it, often at a poor price and with a fee.
In a trade split across two venues, the margin on each venue stands alone. A sharp price move can take one leg to liquidation while the other leg shows a matching gain on a different venue, where it cannot help. Keeping enough collateral on each venue and rebalancing as prices move is the defence.
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