Forced Liquidation

Forced liquidation occurs when a position no longer has sufficient margin to remain open, causing the system to automatically close the position as part of the platform’s risk control mechanism.

  

   

1. When Is Forced Liquidation More Likely to Occur?

   

The risk of forced liquidation increases when:

• Higher leverage is used
• Available margin is limited
• Market volatility becomes more severe

   

  

2. What Is the Liquidation Price?

   

The liquidation price is the market price at which the system may automatically liquidate a position. Liquidation is typically based on the Mark Price rather than the Last Traded Price.

When the Mark Price reaches the liquidation price, the liquidation process will be triggered.

  

  

3. What Happens During Forced Liquidation?

  

Once liquidation is triggered, the system will first cancel related open orders to free up margin before proceeding with partial or full position liquidation based on the position’s risk level.

If the position falls under the tiered liquidation mechanism, the system will generally attempt to reduce risk through partial liquidation before fully closing the position.

For more information about tiered liquidation, please refer to: Tiered Liquidation Mechanism.

  

  

4. How Can the Risk of Forced Liquidation Be Reduced?

  

Users can reduce liquidation risk by:

• Lowering leverage
• Adding more margin
• Reducing position size
• Setting stop-loss orders to limit potential losses in advance

  

   

5. What Happens After Liquidation?

   

After liquidation is triggered, the system will close positions based on the position’s risk level.

• Under Isolated Margin Mode, losses are generally limited to the margin allocated to that position
• Under Cross Margin Mode, available account margin may be used to cover position losses

If any funds remain after liquidation, the remaining balance will be returned to the futures account.

 

  

Risk Reminder: Users are encouraged to closely monitor margin ratios and liquidation prices, manage leverage responsibly, and maintain reasonable position sizes to reduce liquidation risk.