Mandatory liquidation and calculation method
To avoid long-short stampedes and market manipulation, CoinP uses the mark price for forced liquidation. Leverage and risk will be measured based on the user's total position risk under a certain margin currency.
Full position forced liquidation will occur when:
Full position account total balance ≤ maintenance margin, that is, margin rate (Risk Rate) ≥ 100%;
Maintenance margin = maintenance margin rate * position value + liquidation fee
Separate position forced liquidation will occur when:
Separate position margin + unrealized profit and loss ≤ maintenance margin, that is, margin rate (Risk Rate) ≥ 100%
The calculation formula is as follows: (It is recommended that you use the [Calculator] in the upper right corner of the contract interface to calculate before placing any orders)
Full-position mode:
Long order: Liquidation price = (Margin-(Position value*Maintenance margin rate)-(Position value*Taker)-Position value) / (Face value*(Taker-1)*Number of positions)
Short order: Liquidation price = (Margin-(Position value*Maintenance margin rate)-(Position value*Taker)+Position value) / (Face value*(Taker+1)*Number of positions)
Position-by-position mode:
Long order: Liquidation price = (Position value*(1+Maintenance margin rate)-Position margin) / (Number of positions*Face value*(1-Taker))
Short order: Liquidation price = (Position value*(1-Maintenance margin rate)+Position margin) / (Number of positions * face value * (1 + taker))
Among them, position value = number of positions * face value * average opening price.
Forced liquidation process
In order to minimize customer losses and maintain positions, CoinP uses a gradual reduction of positions to handle risks.
When risks occur, the following operations will be performed step by step:
- Cancel orders (only the opening and closing orders of this trading pair in this direction will be cancelled for each position; all opening and closing orders will be cancelled)
- Rolling positions - remove two-way positions (the two-way positions of all trading pairs, excluding the part of each position)
- Reducing positions - according to the level gradient (reducing 2 levels each time, excluding the part of each position)
- Explosion - initiate a lightning commission for the remaining positions to the market
Note: After the risk process is triggered, your order transaction will be temporarily taken over by the risk control engine, and your forced liquidation transaction price will not be reflected in the record or K-line. Once the risk handling process is entered, other operations will be prohibited before the processing is completed.
Maintenance margin rate
The maintenance margin rate is used to calculate the minimum maintenance margin required for users to maintain the current number of positions. When the user's margin is less than or equal to the user's current required maintenance margin, forced position reduction or liquidation will be triggered.
Maintenance margin = position value x maintenance margin ratio + liquidation fee
What is automatic/forced position reduction, forced liquidation, and so-called forced liquidation?
Under the full-position margin system, when the user's position changes in the opposite direction of the latest transaction price, when the margin is less than or equal to the minimum maintenance margin of the position, position reduction or liquidation will be triggered.
Under the position-by-position margin system, when the user's position changes in the opposite direction of the latest transaction price, when the user's position margin is less than or equal to the minimum maintenance margin of the position, position reduction or liquidation will be triggered.
When the user's position level is at a high level, if the position margin is lower than the maintenance margin required for the current level, but still higher than the maintenance margin of the lowest level, the user's entire position will not be directly liquidated. The system will calculate the number of positions required to reduce the position by two levels and perform partial position reduction. After the successful downgrade, if the margin meets the maintenance margin requirement of the new gear, the partial position reduction will stop; if it still does not meet the maintenance margin requirement of the new gear, the partial position reduction process will continue to cycle.
When the margin is lower than the maintenance margin required for this gear; or when the user's position is at the high level or above, but the margin is lower than the maintenance margin required for the low level, the system will directly entrust all the contracts under the contract (full position)/the position (position by position) to the forced liquidation engine according to the bankruptcy price.
This forced liquidation mechanism is mainly to avoid the adverse effects caused by the violent fluctuations of digital currencies, such as serial forced liquidation and position penetration (positions after forced liquidation cannot be traded).
After the forced liquidation is triggered, the forced liquidation engine will forcibly take over the liquidated position. At this time, the user's forced liquidation loss is equivalent to the loss of the position margin to 0, and the maximum loss does not exceed the total margin of the liquidated position.