Before reading this article, please read through Collateral, Exposure, and Margin & Margin Ratio.
The account will get liquidated when the margin ratio in your account falls below the Maintenance margin ratio (MMR). The default margin ratio is 1,000%, indicating you haven’t opened any position. The reference value of MMR is 10%, which could be adjusted according to the IMR factor according to your positions.
The larger the position, the higher the Maintenance margin ratio you will need to uphold. Traders are advised to pay close attention to the movements of the Mark Price and the liquidation price to avoid being liquidated.
Once liquidation is triggered for your account, you can not place any orders during the liquidation process.
A 0.1% trading fee will be charged for the liquidation.
The liquidation engine will carefully reduce positions to minimize the impact on the market with IOC (Immediate or cancel) orders. WOO X utilizes a three-phase liquidation process to ensure a smooth wind down of your positions.
10% < Margin Ratio <= Maintenance Margin Ratio
Once your account triggers the liquidation engine at phase 1, the system will initiate the below actions:
- Cancel all pending orders: All pending orders will be canceled.
- Reduce additional positions: If your borrowed notional is larger than the threshold, the system will automatically reduce the extra position.
5% < Margin Ratio <= 10%
If the margin ratio of your account is below 10% and larger than 5%, the below actions will be taken:
- The liquidation engine will close down 20% of all margin borrow positions from short positions to long positions.
Margin Ratio <= 5%
If your margin ratio is below 5%, your account will trigger the liquidation engine and enter Phase 3 directly. Phase 3 is the last section of liquidation. Your account will begin to close down against the liquidation engine.
- The liquidation engine will reduce 50% of all margin borrow positions.
Note: if total collateral < maintenance margin after performing the above action, the account value will be set to 0.