Overview of Auto Deleveraging (ADL)
In order to avoid the market risk that created by liquidation, We take ADL to fill the liquidated orders that adopted by ADL system.
When a trader’s position is liquidated, the position is adopted by the liquidation engine. If the liquidation cannot be filled by the time the last price reaches the bankruptcy price, the ADL system automatically deleverages opposing traders’ positions by profit and leverage priority.
Auto Deleveraging System Process
ADL mechanism
Profit generates the effective return rate and leverage to calculate the rank. Account with high effective leverage and profit will be order labeled by ADL. If the liquidation position cannot be closed on the market, and the last filled price reached the bankruptcy price, investor with high effective leverage and profit will be applied ADL by bankruptcy price.
Priority Ranking Calculation
Priority Ranking Calculation:
Ranking = P/L Percentage * Effective Leverage (if P/L percentage > 0)
= P/L Percentage / Effective Leverage (if P/L percentage < 0)
Where:
Effective Leverage = abs (Last Price) / (Last Price - Bankrupt price)
PNL percentage = (Last Price – Open Price) / abs (Open Price)
Last Price = Position Value at Market Price
Bankrupt Value = Position Value at Bankruptcy Price
Open price = Position Value at Open price