Liquidation occurs before price hits a Stop Loss (SL) because your available margin drops below the exchange's required maintenance margin threshold. When trading with leverage, your broker or exchange will forcibly close your position (liquidate you) to protect their borrowed capital if your account cannot cover the active losses and fees.
For example If you have $100 of capital and apply 100x leverage, you control a $10,000 position in the market.
The Benefit: A small 1% move in your favor results in a 100% return ($100 profit), doubling your money.
The Risk: A small 1% move against you completely wipes out your $100 capital, resulting in immediate liquidation.
