Liquidation

Liquidation is judged on the mark price, the exchange’s fair price for each perpetual. It blends the book’s own prices with the index, the price of the underlying from outside sources, so a brief push on the book alone moves it little.

Your account value is your collateral plus your unrealized PnL at the mark price. The exchange compares it with three margin levels, each a share of your positions’ value: initial, maintenance and close-out, from largest to smallest.

In pre-liquidation, the terminal explains a refused order: “The account is in pre-liquidation: only orders that make it healthier are accepted.”

All your cross positions share one account value and are checked together. Each isolated position is checked on its own, with its own margin as its collateral.

• Positions, Liq. price. The exchange’s own figure for each position, with how far it is from the mark price under it. It reads none when the position has no liquidation price.
• The chart. A LIQ line at that price, with its distance from the mark. Settings, Chart, Liquidation line turns it on or off.
• The ticket. Before you type a size, “Your ETH position liquidates at”. With a size, Est. liquidation for the position the order would leave, or Liquidation, now → after, when you already hold one.
• The leverage dialog. Its liquidation price, for the position you hold.

The ticket’s estimate is the mark price at which your account value would meet your maintenance margin, worked out as the exchange’s own app works it out. For a cross position, it uses your whole cross account after the order; for an isolated one, the position’s own margin and PnL.

The same 1 ETH long, opened at a mark price of $3,000, in each mode, before fees and funding (ETH’s maintenance margin is 1.2%):

The ticket warns when a stop loss sits past the estimated liquidation price: “The stop loss is beyond the estimated liquidation price.” Liquidation may come first.

1. The exchange cancels your open orders. Their rows read “Cancelled by a liquidation.”
2. If the account is still below maintenance, it closes positions one at a time, each in full, with immediate-or-cancel orders at the position’s zero price or better.
3. It stops as soon as a whole trade has brought the account back above maintenance.
4. Below close-out margin, the LLP takes over your positions, starting with the one with the lowest unrealized PnL, for as long as it can stay above its own initial margin. Any position it can’t take is deleveraged.

The zero price is the price at which a closing trade leaves your account value’s ratio to maintenance margin unchanged. A fill at that price or better never weakens the account.

• The positions. They close at the zero price or better. A long’s zero price sits below the mark price and a short’s above it, so a close can cost more than the position showed. If every position closed at the zero price, your account value would end at zero.
• A liquidation fee. When a liquidation fills at a better price than the zero price, the exchange takes a fee of up to 1% and pays it to the LLP.
• Your open orders. Cancelled in the first step.
• In isolated, what is at stake is that position and its margin, apart from fees the exchange may move from your cross balance to keep it healthy. In cross, your cross balance and your other cross positions.

If an account goes below zero and the LLP can’t cover it, the exchange closes positions on the other side against the bankrupt one. It picks them by leverage and unrealized PnL, at a price no worse than their own zero price. If yours is picked, you see “ETH position deleveraged” and the size closed against a liquidated position.

A notice stays on screen until you choose Got it, such as “ETH partly liquidated”, with what was sold or bought and its price, and Review position. The Liquidations tab lists each one: time, market, type (Partial liquidation or Deleverage (ADL)), side, size, price and value.

To stay clear, keep an eye on Margin in use and Liq. price, add margin to an isolated position, deposit, or make a position smaller. See Leverage and margin.