Understanding liquidation

Warning: Margin trading is a high risk activity. Please read carefully the Risk Warnings on bullish.com.

Liquidation occurs when a margin customer does not meet the maintenance margin requirements for a margin position.

  • Each margin position is given a liquidation risk level of Low, Medium, or High. The liquidation risk level can be viewed in your trade history.
  • You will be sent a platform margin call when your margin position liquidation risk level is High.
  • Under Margin Positions on the Trade screen, you can see your margin position based on the margin trades placed.
  • Choose a margin position to see details such as position size, liquidation price, and liquidation risk level (High/Medium/Low). Liquidation risk is determined by the liquidation price of the respective margin positions calculated systematically by the Bullish algorithm.
  • A platform margin call is provided when the liquidation risk level moves to High. This is reflected in Margin Positions.
  • When you choose a particular margin position, the screen shows the position details. If there is a margin call, you will see a message highlighted in red stating: "Margin Call. Please add collateral or reduce position."
  • In addition to the above alert within the platform, you will also be sent an email notification.

Understanding your liquidation risk

Other customers' margin positions can impact your margin position’s liquidation risk level calculated systematically by the Bullish algorithm. Specifically, as other customers take on more margin positions, your margin position’s liquidation price will get closer to the current Bullish platform price.

Bullish evaluates whether margin loans can be repaid without an individual customer shortfall. As other customers take on more margin positions, the total amount of margin loans on the platform increases. As the total amount of margin loans increases so does the average cost of repaying margin loans, which lowers the estimated value of your collateral, thus, causing your margin position’s liquidation price to get closer to the current Bullish platform price. Bullish continuously monitors your margin positions and adjusts the liquidation risk level to reflect changes in the liquidation risk. Bullish sends an email and a platform margin call when the liquidation risk increases to High.

Responding to a margin call

A platform margin call is an urgent notification that a margin position is at high risk of being liquidated.

Important: Due to market conditions or system constraints it may not be possible to send you a margin call prior to liquidation.

To respond to a margin call:

  1. Go to the left-hand navigation and choose Trade.
  2. Choose the trading pair at the top left corner (e.g. EOS/USD).
  3. Choose Margin Positions under the Price Chart.
  4. Confirm the status and choose Transfer to add more collateral.

Important: If no action is taken, the margin position is likely to be liquidated.

Preventing liquidation

You will be sent an email and a platform margin call when your maintenance margin falls below a certain amount. You can either:

  • Deposit more assets into your margin account, or
  • Reduce the amount of the margin loan.

If your position is liquidated

You will be sent an email and a platform notification “Your margin position was liquidated.”

  • Your position will be closed immediately.
  • The margin interest will be paid first.
  • If there is not enough value in your borrowed assets to repay the margin loan, your collateral will be liquidated.
  • There is the potential for realization of losses after liquidation.

You can place new margin trade orders after liquidation as long as your margin account is funded with the required margin.

Important: Liquidation prices will be based on Bullish platform prices which may differ from prices offered by other digital currency trading venues, third party markets or other external market data sources.

Viewing the details of a liquidation trade

To view more detailed information:

  1. Go to the left-hand navigation and choose Trade.
  2. Choose Trade History under the Order Book and the Price Chart.
  3. View details of the order under the Liquidated column under Type.
Note: Standard fees apply for liquidation trades but there are no extra fees.

Important: Automated market making is available within the upper and lower price boundaries of our range-bound liquidity pools and for our standard liquidity pools. Returns may vary with our range-bound versus standard liquidity pools. Learn more by reviewing important information about our range-bound and standard liquidity pools at https://bullish.com/legal/range-bound-liquidity-pools. 

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