Liquidation
The forced closure of a leveraged trading position by the exchange when losses approach the size of the deposited collateral. It results in losing part or all of the funds invested.
See also
Limit order
An order to buy or sell at a specific price or better. It only executes once the market reaches that price.
Market order
An order to buy or sell an asset immediately at the best price currently available in the market.
Leverage
The use of borrowed funds to increase the size of a trading position. Leverage multiplies both potential profit and potential losses — a high-risk tool.
Rug pull
A scam in which a project's creators suddenly withdraw all liquidity or dump their tokens, crashing the price and leaving investors with worthless holdings.
P2P
Peer-to-peer — a direct cryptocurrency exchange between two users, often for fiat money, without a centralized intermediary handling the trade itself.
Layer 2
A secondary protocol built on top of a base blockchain (Layer 1) that speeds up transactions and lowers fees by moving some computation off the main network.