Forced Liquidation and Prices

I. Price Types

1. Last Price

The last traded price of a futures contract, used in the calculation of realized PnL.

2. Mark Price

A reference price calculated from the index price (based on a weighted average from multiple spot exchanges) and the funding rate. It is used to calculate unrealized PnL and to trigger liquidations.

a. Risk levels and maintenance margin ratios are dynamically changed based on the liquidation factor. Larger positions require a higher margin and have lower available leverage.

II. Forced Liquidation Trigger

Forced liquidation is triggered when the margin ratio ≥100% to prevent further losses.

Margin Formula:

· Initial margin = Face value per contract * Position size / Average entry price / Leverage

· Maintenance margin = Average entry price * Contract count * Face value per contract / Leverage

How to Avoid Forced Liquidation:

When your risk ratio approaches 100%, you can reduce liquidation risk by adding margin to your account or reducing your position size.

III. Forced Liquidation Price

Forced liquidation occurs when the mark price reaches the liquidation threshold. Monitoring the gap between the mark price and the forced liquidation price is essential to avoid unexpected liquidation.

· In cross margin mode, long and short positions of the same contract share the same forced liquidation price.

IV. Forced Liquidation Process

1. When your margin ratio is ≥100%, the system automatically triggers forced liquidation.

2. All open (unfilled) orders in your account are immediately canceled.

3. Depending on position size and risk ratio, the system may apply partial liquidation to reduce exposure before resorting to full liquidation.

V. Notes

· Position Size and Liquidation Type

o Smaller positions are more likely to be liquidated in full due to the limited margin buffer.

o Larger positions follow a tiered margin system, where liquidation is more gradual and risk control is more flexible.

· Suggestion

It is recommended to manually close positions before reaching the maintenance margin threshold, to avoid extra fees associated with forced liquidation.

· Negative Balance

If your account ends up with a negative balance after liquidation, you must deposit funds to restore the balance to positive.