Liquidation and Forced Close System

1. What is the Liquidation and Forced Close System?

The forced liquidation system is the process through which the system handles a user's risky position when the maintenance margin rate of their position or account triggers the danger threshold. The specific process includes "Pre-Reduction Check (Canceling Orders)", "Reducing Position", and "Forced Liquidation". The forced liquidation process differs based on the mode; please refer to the full-position trading rules for details on each mode.

2. What is the Maintenance Margin Rate and Liquidation Fee?

• Maintenance Margin Rate
  For both cross-position and isolated-position contracts: the maintenance margin is calculated by multiplying the position value of each position by its corresponding maintenance margin rate, then summing them up. The maintenance margin rate is the minimum margin required for a user to maintain their current position.
  
  
• Liquidation Fee
  When the account's or position's maintenance margin rate ≤ 100%, the account triggers forced liquidation. The liquidation fee is the fee charged by the system when handling a liquidation order. It is calculated based on the user's current taker fee rate.

 

3. Why is the Tiered Maintenance Margin Rate System Set? How is it Calculated?

To prevent large position liquidations from causing severe market liquidity shocks and large slippage losses, BTCC implements a tiered maintenance margin system. That means the larger the user's position, the higher the maintenance margin rate, and the lower the maximum leverage available to the user.

Each position for every contract and direction is calculated separately in terms of "number of contracts," "position value," and "the maintenance margin ratio required for that position."

For details on each perpetual contract tier, see: Position Tier Details.

 

4. How to Calculate the Margin Rate for USDT-Margined Contracts

• 1. Cross-Position
  Position Margin Rate = (Margin Balance + PnL) / Σ(Position Value * |Contracts| * Mark Price * (Maintenance Margin + Liquidation Fee Rate))
  If there are multiple full-position positions across different asset types, the required maintenance margin and liquidation fees for each are summed up for the numerator.
  
  
• 2. Isolated-Position
  Position Margin Rate = (Margin Balance + PnL) / (Position Value * |Contracts| * Mark Price * (Maintenance Margin + Liquidation Fee Rate))
  Each position is independently calculated with no effect on others.
  
  

For more details, see: Contract Pro Margin Calculation.