What is Forced Liquidation?
To keep the positions open, there should be a certain percentage of position value reserved by the traders, and it is the Maintenance Margin. When your maintenance margin cannot fulfill the maintenance requirement, your Futures position will be liquidated.
CoinEx Futures Contract employs Fair Price Marking to avoid position liquidation due to illiquid markets or manipulation, that is, the position liquidation will be triggered when the Fair price (or Mark price) is lower (Longs) or higher (Shorts) than the liquidation price.
Once liquidation is triggered, your position will be taken over by the liquidation engine at the bankruptcy price and closed in the market. In this case, all pending orders with the same margin coin will be canceled automatically, including TP/SL orders, limit orders, stop-limit orders, and stop-market orders.
1. Overview: The triggered price of liquidation. If the mark price is lower than this price (longs), or higher than this price(shorts), the contract will start the liquidating process.
2. Bankruptcy Price: it refers to the price when all the margin of current position is deducted, or in other words, the margin reaches 0.
3. Calculation (Take Linear Contract as an example):
(1) Long Position
Liquidation Price = Settlement Price * (1 - Liquidation Margin Rate) / (1 - Maintenance Margin Rate)
Bankruptcy Price = Settlement Price * (1 - Liquidation Margin Rate)
(2) Short Position
Liquidation Price = Settlement Price * (1 + Liquidation Margin Rate) / (1 + Maintenance Margin rate)
Bankruptcy Price = Settlement Price * (1 + Liquidation Margin Rate)
Liquidation Margin Rate (Cross) = (Available Balance + Position Margin - Unrealized PNL) / Settlement Value
Liquidation Margin Rate (Isolated) = (Position Margin - Unrealized PNL) / Settlement Value
Settlement Value = Position Amount * Settlement Price
Please refer to What's Settlement Price for how to calculate settlement price when Pyramiding Auto-Settlement is enabled.
(3) Data Update
When any of the following operations are performed, the forced liquidation price and bankruptcy price need to be recalculated
Isolated: Add Position, Close Position, Add Margin Call, Reduce Margin, Adjust Leverage
Cross: Add Position, Close Position, Add New Position Order (For it will reduce the available balance)
4. Notice: When the margin is big enough, there will be a situation where the liquidation price is ≤ 0 for long positions. At this time, the liquidation price is displayed as 0.
Alert on Liquidation
CoinEx will calculate the liquidation risk of your position. When the liquidation risk reaches 70%, an alert on futures liquidation will be notified by email or push. Please pay attention to the information sent by CoinEx.
Calculation of Liquidation risk
(1) Liquidation Risk% (Isolated) = Maintenance Margin / Position Margin * 100%
(2) Liquidation Risk% (Cross) = Maintenance Margin / (Available Margin + Position Margin) * 100%
Maintenance Margin = Position Margin * Maintenance Margin Rate
Position Value = Mark Price * Position Amount
The Maintenance Margin Rate is related to your position amount, and the position level varies according to different Futures types. Please refer to Position Level.