Account-Level Liquidation

Account-Level Liquidation is a risk management mechanism in trading platforms where an entire account is subject to automatic closure if the total equity falls below the maintenance margin requirement. Unlike position-level liquidation, which only targets a specific failing trade, account-level liquidation considers the aggregate margin balance of all open positions.

When the account value drops below the threshold, the system triggers a forced liquidation process to protect the exchange or lending protocol from insolvency. This mechanism is common in cross-margin trading accounts where all collateral is shared across multiple positions.

It ensures that the protocol does not accrue bad debt by exiting positions before the account equity reaches zero. Traders must maintain sufficient collateral to prevent this comprehensive closure.

It is a critical safeguard in highly leveraged environments.