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Liquidation Buffer

Liquidation buffer describes the amount of room remaining between a position's current market conditions and its estimated liquidation point. It may be considered in price, percentage or margin terms depending on the context.

Why it matters to you

Two positions can have the same direction and similar size while having very different amounts of room before liquidation. A small liquidation buffer means relatively little adverse movement may be needed before the platform's liquidation process becomes relevant.

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