What is Auto-Deleverage (ADL)?

When an investor’s position triggers a forced liquidation, their position will be taken over by the CoinEx forced liquidation system.

If the position is closed at a price lower than the bankruptcy price, the system will use the insurance fund to make up for the liquidation loss caused by the forced liquidation.

If the funds in the insurance fund are insufficient or the market liquidity is insufficient and the forced liquidation order cannot be fully completed, the system will activate the automatic position reduction process, that is, ADL (Auto-Deleverage).

When the system enables automatic position reduction, traders who hold positions in this direction will be lightened based on the mark price at the trigger time point of automatic position reduction, according to the profit and leverage size.

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ADL Priority

The system will calculate the position reduction order based on the profit and leverage size.

The higher the profit and the greater the leverage, the higher the priority of being automatically reduced.

The system will sort all positions from high to low according to the direction of long and short. The calculation method of position sorting is as follows:

Sort = profit percentage * actual leverage

in:Actual leverage = cumulative opening value / margin

(Long positions) Profit percentage = mark value / cumulative opening value

(Short position) profit percentage = cumulative opening value / mark value

Mark value = position quantity * mark price

Note: Long and short positions are sorted separately

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ADL Indicator

You can know your priority order in the automatic deleveraging queue through the ADL indicator.

The indicator light is divided into 5 gears, and each gear lights up means that the priority of the position being automatically reduced by 20%.

The more lights on, the higher the ranking, and the higher the priority of being automatically lightened.

ADL Indicator

As shown in the figure, it means that the priority of the current position is in the top 40% of the automatic deleveraging queue.

Therefore, when forced liquidation occurs, your position may be automatically reduced if there is insufficient funds in the risk fund or insufficient market liquidity, which prevents the forced liquidation order from being fully executed.

You will receive a position reduction notice from the system and cancel the current unexecuted order.

You can reduce the risk of being automatically reduced by reducing your leverage or closing part of your profit or loss according to your rank in the automatic reduction queue.

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