Liquidation is a key concept in margin trading and derivatives markets, referring to the process by which a broker or exchange forcibly closes a trader's position when their account equity falls below the required maintenance margin, commonly referred to as the liquidation threshold. Originating from traditional finance practices, liquidation is a topic widely discussed in cryptocurrency trading, where market volatility can lead to rapid changes in asset value. This process is designed to protect both the trader and the exchange from losses that could exceed the collateral provided.