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Initial Margin Notifications and Forced Liquidation
Initial Margin Notifications and Forced Liquidation

Information about what happens if the Margin Balance falls below the Initial or the Maintenance Margin

Support Specialist avatar
Written by Support Specialist
Updated over a week ago

The Exchange uses Mark Price as a means to help avoid unnecessary liquidations and to manage user position risk. Forced Liquidation happens when Margin Balance falls below the Maintenance Margin, it is executed progressively to minimize the market impact of the execution. However, traders who hold relatively small positions may experience full position liquidation.

More information about Margin Balance, Initial Margin, and Maintenance Margin can be found here.

What is the Estimated Liquidation Price?

The estimated liquidation price is the Perpetual or Futures contract price at which your portfolio will be liquidated if the price of a particular instrument reaches that level. It's important to note that this calculation assumes that the prices of other instruments in your portfolio will remain unchanged.

Therefore, it is your responsibility to regularly monitor your account balance and exposure to ensure you are comfortable with the level of risk you undertake.

The estimated liquidation price can be found on the UI in the Positions tab.

Example:

Instrument

Type

Quantity

Price

Notional Value

BTC

CCY

4.833512772

42,554

205,687

BTC-PERP

PERP

-100

42,565

(4,256,530)

CRO-PERP

PERP

1000000

0.08

81,380

USD

CCY

-50,000

1

(50,000)

If you hold 1,000,000 long CROUSD-PERP contracts, based on your current holdings, the estimated liquidation price for the CROUSD-PERP contract is $0.04845. This means that if the mark price of CROUSD-PERP goes below $0.04845, the margin balance will fall below the maintenance margin threshold, triggering a liquidation, assuming that the prices of other instruments in your portfolio will remain unchanged.

If you hold 100 short BTCUSD-PERP contracts, based on your current holdings, the estimated liquidation price for the BTCUSD-PERP contract is $42,846.44. This means that if the mark price of BTCUSD-PERP goes above $42,846.44, the margin balance will fall below the maintenance margin threshold, triggering a liquidation, assuming that the prices of other instruments in your portfolio will remain unchanged.

Please note that the liquidation price is calculated separately for each instrument and does not take into account potential price correlation and margin netting benefits across instruments. If you have multiple instruments related to the same underlying asset, like a BTC Perpetual contract and a Spot BTC, the actual liquidation may be triggered sooner or later than the estimated price due to the movement of other instruments in your portfolio.

Additionally, if you have open orders, the potential price impact on those orders is not taken into account. It's important to be aware of these limitations and monitor your account accordingly.

What happens if the Margin Balance falls below the Initial Margin?

If the Margin Balance falls below the Initial Margin, then:

  • All open orders that would increase the position will be automatically canceled, and new orders that would increase the position will be rejected

  • Withdrawals will be restricted during this time

  • Only orders that would decrease the position will be allowed (e.g. you can only place sell orders if you hold a long position)

  • A warning email will be sent as a reminder to monitor your position closely, to add more collateral, or reduce the position.

What happens if the Margin Balance falls below the Maintenance Margin?

If the Margin Balance falls below the Maintenance Margin, then:

  • All open orders will be automatically canceled, and all new orders will be rejected

  • Withdrawals will be restricted during this time

  • The position(s) will be progressively liquidated until the Margin Balance is greater than the Initial Margin and the Maintenance Margin

  • An email will be sent as a confirmation that the position(s) have been progressively liquidated

All Liquidation Orders will be subject to a liquidation fee, which will be added to

the Insurance Fund. Liquidation fees can be found here.

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