Liquidation and Auto-Deleveraging (ADL)
Liquidation is the forced closure of a position due to insufficient margin. Learn how it works, how the liquidation price is calculated, and what ADL means.
What is liquidation
When the market moves against your position, the available margin decreases. Once it reaches the Maintenance Margin (MMR) threshold, the exchange closes the position automatically to prevent the loss from exceeding the available collateral.
The account balance is not affected. In cross mode, the exchange can use the entire wallet balance.
Liquidation Price Formula
Short: Liquidation Price ≈ Entry Price × (1 + 1/Leverage − MMR)
Liquidation process
- Margin Call — The margin balance reaches the warning threshold between IMR and MMR
- Partial closure — The position size is reduced
- Full liquidation — The Margin Ratio reaches 100%
- Insurance Fund — Covers any remaining deficit
Auto-deleverage (ADL)
If the insurance fund is exhausted, the exchange may automatically reduce profitable positions on the opposite side of the market, starting with the highest-leverage positions with the largest profits.
The position card shows an ADL queue indicator. Higher leverage and greater unrealized profit move a position closer to the front of the queue. To reduce the risk, lower your leverage or take partial profit.
(1) Set a Stop Loss to exit before forced closure. (2) Monitor the Margin Ratio; if it rises, add margin or reduce the position. (3) Avoid leverage above 10x until you have sufficient experience.
Frequently asked questions
Liquidation is triggered by the Mark Price, not the Last Price. See “Margin and PnL” for details. Accumulated funding payments and fees are also included because they reduce margin. The liquidation price displayed in the interface accounts for all these factors in real time.
When a critical level is reached, the exchange first tries to reduce the position size through partial liquidation. Full liquidation occurs only if this is not enough.