Derivatives are often leveraged devices, permitting merchants to take bullish (lengthy) or bearish (brief) positions price greater than the quantity they’ve deposited as a margin on the alternate. Leverage is a double-edged sword, magnifying each income and losses. It additionally exposes merchants to liquidations, or pressured unwinding, because of margin shortfalls. Moreover, mass liquidations typically result in exaggerated bullish or bearish strikes, so the better using leverage, the upper the chance of liquidations injecting volatility into the market.