Liquidation Level of Isolated and Cross Margin
Most BitMEX contracts offer high leverage. To maintain a position, a trader must hold a certain percentage of the value of the position on margin, also known as maintenance margin. Minimum maintenance margin requirements can be found on the Risk Limits page.
If you are unable to meet the margin requirements, you will be liquidated and will lose your maintenance margin.
You can view the liquidation price for each position through the “Hold Positions” tab, and adjust the liquidation price by adding additional margin, adjusting the leverage slider, or through the risk limit options.
How to minimize liquidations
BitMEX uses a fair price marking method to avoid liquidation due to lack of liquidity or market manipulation.
Risk limits also require higher margin levels for larger positions. In this way, BitMEX’s liquidation engine can use more margin to effectively close large positions, otherwise it is difficult for these positions to be closed safely.
Under safe circumstances, large positions will be gradually liquidated.
If a liquidation is triggered, BitMEX will cancel all unfilled orders for the contract to release the margin and maintain the position. The delegation of other contracts is not affected.
Liquidation process of BitMEX
BitMEX uses a partial liquidation method, which automatically attempts to reduce the maintenance margin requirement to avoid liquidation of the entire position.
Users with minimum risk limits
- BitMEX cancels all unfilled orders for this contract.
- If the maintenance margin requirement is not met at this time, the position is taken over by the liquidation engine at the bankruptcy price.
Users with high risk limits
The liquidation engine will attempt to lower the user’s risk limit by the following methods, thereby reducing the margin requirement:
- Try to maintain the current order and position unchanged, and reduce the user’s risk limit.
- Cancel the unfilled order, but keep the existing position and reduce the user’s risk limit.
- Submit a FillOrKill (full execution or immediate cancellation) order, the value of this order is equal to the difference between the current position value and the risk limit value that meets the current margin requirements, so as to avoid further liquidation.
- If the position is still liquidated, the entire position will be taken over by the liquidation engine at the bankruptcy price.
System Gains and Losses
If BitMEX can close the position at a better price than the bankruptcy price, the additional funds will be added to the insurance fund .
If BitMEX is unable to close the position at the bankruptcy price, BitMEX will spend the insurance fund and try to close the position in the market.
If the liquidation order still cannot be cleared, this will result in an automatic liquidation event.