Liquidation refers to the forced closure of a trader's position by an exchange or broker in leveraged or futures trading when the trader's position incurs losses that exceed the initial or maintenance margin. The purpose of liquidation is to protect market stability and the interests of the exchange. When the trader's losses exceed the initial or maintenance margin level, the exchange or broker will automatically initiate a forced liquidation mechanism to close the trader's position and return any remaining funds to the trader. The liquidation price is typically determined by the exchange or broker based on market conditions and a predetermined calculation method. Liquidation can result in losses that exceed the initial or maintenance margin, and therefore leveraged or futures trading carries high risks. Traders should carefully assess the risks and make decisions based on their individual circumstances.