1. The Concept of Forced Liquidation
CoinTR futures offers futures trading up to 125 times of leverage. To maintain a position, investors must hold a certain percentage of the value of the position, also called maintenance margin. Minimum maintenance margin requirements can be found on the Risk Limits page.
When a user's position is liquidated, a certain proportion of the insurance liquidation fee (70%) will be charged and deposited into the insurance fund reserve, which will be marked as "Insurance Fund Sharing" in the transaction record. If the user's account goes bankrupt, the insurance fund will cover the additional loss.
2. Minimisation of Liquidations
Use reasonable price tagging to avoid liquidation due to a lack of liquidity or market manipulation.
Risk limits also require larger positions to require higher margin levels. In this way, the system can use a lot of margins to close a large number of positions, otherwise, these positions will be difficult to close safely. Under safe conditions, larger positions are incrementally liquidated.
If liquidation is triggered, all unfilled orders of the client in the contracts will be revoked to release the margin and maintain the position.
3. Users in Liquidation are Prohibited from Trading
CoinTR futures will cancel all open orders with the same contracts margin currency. If this does not satisfy the maintenance margin requirement then the position will be liquidated by the liquidation engine at the bankruptcy price. (Bankruptcy Price is a price level that indicates you have lost all your initial margin. )
The risk control engine will not directly choose to handle the user's positions at the bankruptcy price but will try to close it at an appropriate price.
During the liquidation process, if the user's position meets the maintenance margin requirements for the remaining positions, the risk control engine will stop the liquidation, which will prevent the large positions from being completely liquidated.
If the position to be closed is in the liquidation process, investors cannot perform other operations on the contract of the position except to increase the position funds.
If the liquidated position is a Cross Margin, investors cannot perform any operation on contracts with the same margin currency as the position, except to transfer funds to the contract account.
4. Cross Margin and Fixed Margin
The system will adjust the risk limit tiers in real-time according to the user's order and position. Once the user triggers premature liquidation:
- The account will be prohibited from trading;
- All orders will be canceled;
- The system will check if there's a premature liquidation:
If there is: The system continues the premature liquidation process;
If there's not: The system cancels premature liquidation and restores the trading authority of the account.
- The contract positions start to liquidate:
If the liquidation can be filled: The remaining margin will be transfer to the risk fund account and the leftover to the user's account;
If the liquidation cannot be filled: It will spend the Insurance Funds on aggressing the position in the market in an attempt to close it. When the risk fund account balance is insufficient, ADL will work.