Forced Liquidation&Liquidation

Trigger of Forced Liquidation

Hotcoin uses Fair Price Marking for the purpose of avoiding liquidation due to illiquid markets or manipulation.

Risk Limits are also imposed that require higher margin levels for larger position sizes. This gives the Hotcoin liquidation system more usable margin to effectively close large positions that would otherwise be difficult to safely close. If it is safe to do, larger positions are incrementally liquidated.

If a liquidation is triggered, Hotcoin will cancel any open orders on the current contract in an attempt to free up margin and maintain the position. Orders on other contracts will still remain open.

Forced Liquidation & Liquidation Process

Hotcoin employs a Partial Liquidation process involving automatic reduction of maintenance margin in an attempt to avoid a full liquidation of a trader’s position.

1. Users on the Lowest Risk Limit tier

1）Hotcoin will cancel any open orders in the contract.

2）If the available balance is increased and the maintenance margin requirement is met, the liquidation won't happen.

3）If this does not satisfy the maintenance margin requirement then the position will be liquidated by the liquidation engine at the bankruptcy price.

4 ) System will calculate the liquidation price of the position once it is failed to be liquidated,that could incur immediate liquidation of your positions for auto-system matchmakings.

Liquidation Example

User A opened 1 long contract at 1,000 USD. The liquidation price is 900 USD and the bankruptcy price is 850 USD. If the liquidation happens, the engine will take over this position at 850 USD and liquidate it in the market. If the order is filled at 890 USD, then the remaining margins in corresponding to the gaps of 40 USD will be returned to their user account.

User B opened 1 long contract at 1,000 USD. The liquidation price is 900 USD and the bankruptcy price is 850 USD. That could incur immediate liquidation of your positions for auto-system matchmakings in the price of 850,which means there will be a total loss in position margin of user account.