Overview of Auto-Deleveraging (ADL)
When a trader’s position is liquidated, the position is taken over by the AMANPURI EXCHANGE liquidation engine. If the liquidation cannot be filled by the time the mark price reaches the bankruptcy price, the ADL system automatically deleverages opposing traders’ positions by profit and leverage priority.
The price at which a traders’ positions are closed out is the bankruptcy price of the initial liquidated order.
The Insurance Fund is used to prevent ADL. If it is depleted for a given contract, ADL will occur.
If you are deleveraged, you will be sent a notification. Open orders will be cancelled and you are free to re-enter.
Priority Ranking Calculation
Deleveraging priority is calculated by profit and leverage. More profitable and higher leveraged traders are deleveraged first.
The ranking calculation is as follows:
Ranking = PNL Percentage * Effective Leverage (if PNL percentage > 0) = PNL Percentage / Effective Leverage (if PNL percentage < 0) where Effective Leverage = abs(Mark Value) / (Mark Value - Bankrupt Value) PNL percentage = (Mark Value - Avg Entry Value) / abs(Avg Entry Value) Mark Value = Position Value at Mark Price Bankrupt Value = Position Value at Bankruptcy Price Avg Entry Value = Position Value at Average Entry Price
The system splits these positions by longs and shorts and ranks the positions from highest to lowest.