Liquidation Cluster
A liquidation cluster is an area where a relatively large amount of leveraged positioning is estimated to become vulnerable to liquidation around similar price levels.
Why it matters to you
When many leveraged positions have similar liquidation areas, a move into that zone can potentially trigger substantial forced buying or selling. This can increase volatility and contribute to rapid price movement. Estimated clusters are analytical tools, not exact maps of every market participant's liquidation price.
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