1. What is liquidation?
Liquidation refers to the forced closure of a position when the equity in the margin account falls below a certain level. To prevent further losses, the platform will automatically close the position.
2. What situations will trigger liquidation?
When the Maintenance Margin Ratio ≤ 100%, it indicates that your account equity is insufficient to cover the maintenance margin and potential liquidation costs. At this point, the system will trigger liquidation. Therefore, please monitor your margin ratio closely at all times.
3. What is the liquidation process?
Liquidation is not a single-step process. It generally involves three stages: Order Cancellation, Position Reduction, and Liquidation.
Order Cancellation
When the account risk exceeds a certain level but has not yet reached the position reduction risk threshold, the system will cancel some open orders to help restore the account to a safer state.
Position Reduction
Positions are reduced in tiers. After partially closing positions, the system will check whether the maintenance margin requirement for the new position tier is satisfied. If the requirement is met, further reductions will not continue.
Liquidation
During the gradual reduction process, if the account risk remains too high, positions will continue to be closed until they are fully liquidated.
4. Where can I check the liquidation price?
On the Positions page, the system displays an estimated liquidation price in the lower section of each contract position.
However, this estimated liquidation price is not the actual price at which liquidation occurs. It is only a system estimate.
The actual liquidation or position reduction price is determined by the Mark Price when the Maintenance Margin Ratio ≤ 100%.
5. What fees are incurred during liquidation?
The liquidation process may involve the following fees:
Liquidation Fee
The platform charges a liquidation fee based on your current fee tier and the applicable liquidation fee rate. The fee is calculated based on the position value, rather than the margin.
Position Reduction Fee
After liquidation is triggered, a position reduction fee corresponding to the reduced position size will be charged. This fee is determined by the maintenance margin requirement of the position tier based on the number of contracts reduced.
This amount is used to cover potential losses incurred by the liquidation engine when closing positions. If there is any remaining balance, it will be transferred to the Insurance Fund.
If a negative balance occurs due to bankruptcy, the deficit will be covered by the Insurance Fund, and the user will not be required to bear the loss.