When a trader’s position is liquidated, the position is taken over by MEXC's Contract liquidation system. 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.
Deleveraging priority is based on a trader’s profits and effective leverage used. This means that traders who are highly leveraged and making more profits will be deleveraged first. The system reduces positions by longs and shorts, ranking them from highest to lowest.
The ADL indicator displays a trader’s position-specific risk of being deleveraged. It increases in 20% increments. When all the indicators lighten up, it means that a trader’s position is at a high risk of being deleveraged. In the event of a liquidation that is unable to be fully absorbed by the market, deleveraging will occur.
Priority Ranking Calculation:
Ranking (if PNL percentage > 0) = PNL Percentage * Effective Leverage
Ranking (if PNL percentage < 0) = PNL Percentage / Effective Leverage
Effective Leverage = |(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
Article is closed for comments.