What is an example of predatory trading?

Similarly, traders who use stop loss orders contribute to potential liquidation events. Stop loss orders are pre-set instructions to sell an asset once it reaches a specified price level, typically below the current market price. These orders are intended to minimize losses but can also amplify market movements if many traders have their stop loss levels clustered around the same price point.

In financial markets, various scenarios can trigger the need for liquidation among market participants. One such instance involves hedge funds that are approaching margin calls. These funds, due to the impending financial pressure, may be compelled to liquidate their positions to meet margin requirements or avoid further losses.

The impact of such liquidations can extend beyond the hedge funds themselves. Counterparties, such as banks financing these trades, often have visibility into the financial health of their clients. As such, they may anticipate the need for liquidation and adjust their positions accordingly. This anticipation can lead to additional market volatility as banks and other financial institutions realign their exposures.

Another group of traders who may liquidate their positions in response to market conditions are those who employ portfolio insurance strategies. Portfolio insurance involves techniques designed to protect investments from significant losses. When market prices drop, these strategies can trigger automatic sell orders to limit further declines.

BTCC, a prominent cryptocurrency exchange, offers a range of services that cater to the diverse needs of traders and investors. Among its offerings are spot trading, which allows users to buy and sell cryptocurrencies at current market prices, and futures trading, which provides Leveraged exposure to price movements. Additionally, BTCC provides wallet services, offering a secure storage solution for digital assets.