Forced Liquidation Process
In digital asset contract trading, market volatility can significantly impact users’ positions. When a user’s losses expand to the point where their margin can no longer support their positions, the system will initiate a forced liquidation process to prevent further risk transmission. On the CoinW platform, in such scenarios, the platform’s unique risk control logic automatically takes over and liquidates positions to safeguard platform stability and user asset security.
Forced liquidation typically occurs when a user’s margin ratio drops sharply and falls below the required maintenance margin threshold. On CoinW, the forced liquidation condition is defined as: when the margin ratio is equal to or less than 100%. In other words, once a user’s margin ratio falls to or below this level, the system determines that the position can no longer be maintained, and forced liquidation is immediately triggered.
During execution, CoinW employs a more user-friendly risk management mechanism compared to traditional platforms, known as the Tiered Liquidation Mechanism. Unlike traditional systems that immediately liquidate all positions once a risk threshold is breached, CoinW first attempts to reduce the user's position incrementally. If the margin ratio still fails to meet the requirement after a partial reduction, the system will continue to gradually reduce the position until the margin ratio is restored or the position is fully liquidated. This mechanism aims to minimize the negative impact of large position liquidations on the broader market while preserving as much of the user's remaining assets as possible.
Under Isolated Margin mode, only the specific position with losses will be liquidated, while other unaffected positions remain intact. In contrast, Cross Margin mode means that the entire contract account’s available margin may be used to cover losses. As a result, when liquidation is triggered, it may affect all open positions under the account. Users should carefully consider their risk tolerance before selecting a margin mode.
During the liquidation process, the system will take over the position at a bankruptcy price and immediately place a market order to close the position. This price represents the level at which the position’s allocated margin has been fully depleted. It serves as the internal reference price used by the platform to execute forced liquidation.
It's important to note that the bankruptcy price is not displayed on the public K-line (candlestick) chart, so the actual liquidation execution price may differ from what users see in the market price feed.
Forced Liquidation Process
In digital asset contract trading, market volatility can significantly impact users’ positions. When a user’s losses expand to the point where their margin can no longer support their positions, the system will initiate a forced liquidation process to prevent further risk transmission. On the CoinW platform, in such scenarios, the platform’s unique risk control logic automatically takes over and liquidates positions to safeguard platform stability and user asset security.
Forced liquidation typically occurs when a user’s margin ratio drops sharply and falls below the required maintenance margin threshold. On CoinW, the forced liquidation condition is defined as: when the margin ratio is equal to or less than 100%. In other words, once a user’s margin ratio falls to or below this level, the system determines that the position can no longer be maintained, and forced liquidation is immediately triggered.
During execution, CoinW employs a more user-friendly risk management mechanism compared to traditional platforms, known as the Tiered Liquidation Mechanism. Unlike traditional systems that immediately liquidate all positions once a risk threshold is breached, CoinW first attempts to reduce the user's position incrementally. If the margin ratio still fails to meet the requirement after a partial reduction, the system will continue to gradually reduce the position until the margin ratio is restored or the position is fully liquidated. This mechanism aims to minimize the negative impact of large position liquidations on the broader market while preserving as much of the user's remaining assets as possible.
Under Isolated Margin mode, only the specific position with losses will be liquidated, while other unaffected positions remain intact. In contrast, Cross Margin mode means that the entire contract account’s available margin may be used to cover losses. As a result, when liquidation is triggered, it may affect all open positions under the account. Users should carefully consider their risk tolerance before selecting a margin mode.
During the liquidation process, the system will take over the position at a bankruptcy price and immediately place a market order to close the position. This price represents the level at which the position’s allocated margin has been fully depleted. It serves as the internal reference price used by the platform to execute forced liquidation.
It's important to note that the bankruptcy price is not displayed on the public K-line (candlestick) chart, so the actual liquidation execution price may differ from what users see in the market price feed.