# Liquidations

## What is Liquidation?

Liquidation is a process in leveraged trading that occurs when a trader's position falls below its required Minimum Maintenance Margin. In the context of GooseFX DEX, traders who use leverage are borrowing funds from the platform to increase their exposure to a particular asset.

To ensure the stability of the platform and to protect against potential losses, GooseFX DEX requires traders to maintain a minimum amount of collateral in their account, known as the Minimum Maintenance Margin. If a trader's position falls below this level, the platform will trigger a liquidation process to take over the position and use the remaining collateral to settle any potential losses.

It is important for traders to keep an eye on their position's value and margin levels to avoid liquidation. The Insurance Fund, which is created by liquidation fees, may also be used to settle losses in the event of a rapid price movement or if liquidations do not happen in time.

## Example <a href="#irn8v" id="irn8v"></a>

* *Alice open's a long position on BTC at $20,000 dollars with 10x leverage using $100 USDC*
* *The position value is $1000 USDC long on BTC, with $100 USDC in margin/collateral*

The current maintenance margin of your position is calculated by total collateral / position size.

Here, that would be 10% as 100 / 1000.

If the maintenance margin of your position drops below the Minimum Maintenance Margin, your position will be eligble for liquidation by liquidators.


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