Explanation of the liquidation formula under the two position modes:
【Cross Mode】
Long position liquidation price = contract face value * position quantity * (contract maintenance margin rate + 1) / (account balance-other contract maintenance margin + other contract unrealized profit and loss + contract face value * position quantity / average opening price)
Short position liquidation price = contract face value * position quantity * (contract maintenance margin rate-1) / (account balance-other contract maintenance margin + unrealized profit and loss of other contracts-contract face value * position quantity/ average opening price)
【Isolated Mode】
Long position liquidation price = contract face value * position quantity * (contract maintenance margin rate + 1) / (contract face value * position quantity / average opening price)
Short position liquidation price = contract face value* position quantity *(1-contract maintenance margin rate) / (face value of contract * position quantity /average opening price)
Liquidation Process
Deepcoin (hereinafter referred to as DC) uses a reasonable price marking method to avoid forced liquidation due to insufficient liquidity or market manipulation.
Risk limits require higher margin levels as positions increase to control the market impact caused by liquidation risks of large positions.
If the liquidation is triggered, use the partial liquidation method to try to reduce the maintenance margin requirements, avoid all positions being liquidated, and control user risks.
Users who use the lowest risk limit:
Cancel all unexecuted orders for this contract; if the maintenance margin requirement is not met at this time, the position will be taken over by the liquidation engine at the bankruptcy price.
Users who use the second level or above risk limit:
The liquidation engine will use the following methods to try to reduce the user's risk limit, thereby reducing the margin requirement:
Try to maintain the current order and position unchanged, directly reduce the user's risk limit; cancel the uncompleted order, but keep the existing position to reduce the user's risk limit; submit the FillOrKill (full execution or cancel immediately) order, the value of this order It is equal to the difference between the current position value and the risk limit value that meets the current margin requirements, so as to avoid further liquidation; if the position is still in the liquidation state, then all positions will be taken over by the liquidation engine at the bankruptcy price.
* To avoid forced liquidation as soon as open a position, and to protect our users' interests, Deepcoin has added the last price as the basis for calculating forced liquidation price under the former forced liquidation process. That is, the forced liquidation process is triggered only when the last price and the mark price reach the forced liquidation price at the same time.
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