IV.Auto-Deleveraging(ADL)

 Auto-Deleveraging(ADL)

When the user's positions get liquidated, the remaining position will be taken over by MXC perpetual contract liquidation system. If the liquidation position can not be filled by the time the mark price reaches the bankruptcy price, the ADL  system will automatically deleverage opposing traders’ positions by profit and leverage.

The auto-deleveraging ordering system

1.The process of position reducing:

The following is the process of position reducing:

When the position closing is based on the bankruptcy price of the liquidation position and the insurance fund is insufficient,  auto-deleveraging will be triggered.

The counterparty calculates the valid leverage and PnL ranking according to the profits and leverage. More profitable and higher leveraged traders are deleveraged first. The system reduces the positions by longs and shorts and ranks the positions from highest to lowest.

2.ADL indicator: 

The ADL indicator will execute the ADL warning according to the user's rank of all positions for that contract. The user's rank in the sequence will be displayed by this indicator at any time, and this indicator will show the user's priority by 20% increments.

When all the indicators lighten up, which means that the user's ranking is on the highest. When the position closing is unavailable in the market, the deleveraging occurs.

 3.Priority Ranking Caliculation

Ranking=PnL Percentage*Effective Levrage (if PnL percentage ＞0)

=PnL Percentage/Effective Levrage (if PnL percentage ＜0)

where:

Effective Leverage=abs(Mark Value)/(Mark value-Bankrupty Value)

PnL percentage=(Mark Value-Avg Entry Value)/abs(Avg Entry Value)

Mark Value= the Position Value at the Mark price

Bankrupty Price= the Position Value at the Bankrupty Price

Avg Entry Value=the Position Value at the Avg Entry Price