CASCADING LIQUIDATIONS

Crypto-currency trading is very risky and extremely volatile. It even becomes more volatile when the newbies' inexperienced traders join the race. Most of them don’t bother to acquire the requisite knowledge before executing a trade. All that is required for them to open a trade is just the internet, a computer or smartphone, and steady electricity. Moreover, instead of starting with spot markets and learning along the line, they prefer going for leveraged trading in futures markets.

As a result, when there is little shake off or correction in the market, most of these leveraged traders, who enter the market blindly and open positions recklessly are grossly affected and get liquidated by the slight change in the market.

When these liquidations occur, they will create more selling pressure in the market, which is most likely to precipitate into more liquidations, hence, the word Cascading Liquidations.

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