Understanding the “Liquidation Only” Error Message in Trading

The “Liquidation Only” error message can be frustrating for traders who suddenly find they can no longer place new trades. This message typically appears in prop firm accounts that have violated trading rules. Let’s break down why this happens and what you can do about it.

Why Am I Getting a “Liquidation Only” Error?

Prop Firm Accounts That Fail the Challenge

One of the most common reasons for this error is failing a prop firm account challenge. Many traders use prop firm accounts to access capital, but these accounts come with strict rules, including:

• Daily loss limits – If your losses exceed the set limit for the day, trading may be restricted.

• Maximum drawdown – If your total account drawdown exceeds the allowed percentage, your account may be moved to liquidation-only mode.

When a prop firm enforces these rules, traders can only close existing positions—they cannot place new buy or sell orders.

How to Fix It

• Check if you violated the prop firm’s rules by reviewing your trading history.

• Contact the prop firm’s support team to confirm if your account is in liquidation mode.

• Determine if a reset is possible—some firms allow traders to restart the challenge for a fee.

What Happens If I Ignore the Liquidation-Only Restriction?

If a trader does not close their positions in a liquidation-only account, the prop firm will forcefully close them by the end of the trading session. This could result in:

• Loss of any remaining account balance.

• Disqualification from the challenge or loss of funding.

• Needing to restart the evaluation process from scratch.

Final Thoughts

The “Liquidation Only” error is a clear sign that a trader has breached a prop firm’s rules. The best way to avoid this restriction is to carefully track daily loss limits and drawdowns. If you receive this message, check with your prop firm to see if you have options to reset or requalify.