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Liquidation Process

A partial liquidation process is adopted as a way to prevent a full liquidation of a trader’s position. To achieve this, the process involves an automatic reduction of maintenance margin.

Lowest Risk Limit Tier

  1. 1.’ algorithm cancels any open orders in the contract.
  2. 2.
    After the cancellation, if the maintenance margin requirement is still not satisfied, the position will be liquidated. This process is executed by the algorithm when the Mark Price equals bankruptcy price.

Higher Risk Limit Tier’ algorithm attempts to bring a user down to a lower Risk Limit, and thus lower the margin requirements. This is done by the following steps:
  1. 1.
    Attempting to bring a user down to a Risk Limit associated with their open orders and current position.
  2. 2.
    Cancelling any open orders, and attempting to bring a user down to a Risk Limit associated with their current position.
  3. 3.
    Submitting a FOK order of the difference between the current Risk Limit position size and the position size to satisfy the margin requirement to avoid liquidation.
  4. 4.
    If the position is still in liquidation, the liquidation algorithm will take over. A limit order will be issued at the bankruptcy price to close the position.