BackQuant Glossary
Leverage
The ratio of position size to margin posted. 10x leverage means a 10% adverse move wipes out the position. Crypto perpetual exchanges commonly offer up to 100x leverage. Higher leverage means smaller liquidation thresholds and faster cascades.
Related terms
Liquidation
The forced closing of a leveraged position when margin runs out. The exchange auto-sells to cover the loss. Liquidations add directional flow in the same direction as the existing move, which is why they cluster.
Liquidation Cascade
A self-reinforcing chain of liquidations where each forced close drives price further into the next cluster of stops. Cascades produce the sharpest, fastest moves in crypto markets and typically resolve in minutes rather than hours.
Long
A position that profits when price rises. Buying spot, going long a perp, owning a call, or being short a put are all long positions. Opposite of short.
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