Recently, a friend asked me why his $LIGHT isolated margin position was liquidated to a negative 150%. I looked into his trades, and there are actually several reasons worth clarifying.

In isolated margin mode, if you invest 100 units to go long and the price keeps falling, when your loss approaches the margin, the system will forcibly close the position. But if the market fluctuates extremely violently, the closing price might be lower than the liquidation price—that is, your loss could surpass the margin, ultimately owing money to the exchange. This is why losses can exceed 100%.

Another common situation is that some people continue to add to their position after misjudging the market direction. The leverage in isolated margin can amplify this mistake by several times or even dozens of times. Once a forced liquidation is triggered, the loss could far exceed the initial capital.

Additionally, slippage and fees are factors. In extreme market conditions, the actual transaction price may be far from your expected price. Coupled with trading fees and interest, these can further increase losses.