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Support CenterFuturesOpposing Auto Deleveraging (ADL) System Rules
Opposing Auto Deleveraging (ADL) System Rules
2022/11/03 10:07:30

Our tutorial video helps solve common problems and provides information regarding related topics:

More details are available in the whole article below.

When a trader’s position is liquidated but 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.

When ADL happens to the orders of selected opposing traders, our system executes the latest trade price for the selected trader to avoid the situation where trade price cannot be listed on the candlestick chart.

The opposing orders of selected traders will be reduced to two queues, one for long positions and one for short positions. Ranking and Deleveraging will be done by the queues based on the index of ADL.

The ADL ranking is derived in order of effective leverage use and highest profit. We use the “Opposing Auto Deleveraging Index” to calculate the number of higher ADL of the trader and the opposing order of the selected trader will be deleveraged first at the trade price.

Here is the formula:

Profitable scenario: Index = Revenue Percentage X Effective Leverage

Loss scenario: Index = Revenue Percentage X Effective Leverage

In this scenario, 

Effective Leverage=abs(marked price)/(marked price-bankruptcy price)

Marked Price=The price position of the mark price

Bankruptcy Price=The price position of bankruptcy price

Average opening price= The price position of the opening price

Assuming that the system automatically deleverages an opposing position, the trader will receive the notification of liquidation. If the trader owns unfilled orders, those will be canceled automatically. When the opposing order of selected traders liquidates, the ADL users can start to trade.

The ADL system could force users to liquidate all of their positions if they are the opposing order of the selected trader. In this scenario, we won’t charge any handling fee.

FAMEEX will try to avoid this scenario as much as possible, and minimize the impact of the ADL liquidation. Due to the high volatility of the cryptocurrency market and the high leverage of the contracts market, this situation may still occur.

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