Act before the liquidation queue
- Track margin fraction against the maintenance threshold continuously, especially during fast mark-price moves.
- Define internal action thresholds that trigger before the platform’s liquidation threshold, not at it.
- Reduce position notional or add collateral as soon as those internal thresholds are crossed.
- Cancel non-essential open orders if they are consuming risk budget or locking attention away from immediate exposure reduction.
- Re-check the mark price and bankruptcy-risk posture before you assume your account is safe again.
If liquidation begins
- Assume pending orders can be canceled as liquidation handling starts.
- Watch for both
ORDER_UPDATEandSTRATEGY_UPDATEeffects. Liquidation is not only an order-print story. - Determine whether the resolution stayed on the normal liquidation path or moved into ADL.
- Compare execution outcomes against the bankruptcy-price logic so you can understand whether the insurance fund or ADL path absorbed the stressed remainder.
- Do not reopen exposure until the strategy state is fully reconciled.
Distinguish the two stressed paths
| Path | What it means operationally |
|---|---|
| Normal liquidation | The platform found enough usable liquidity inside the allowed price guards to unwind the position |
| ADL | Normal liquidation could not fully resolve the account inside liquidity, price-band, minimum-size, or insurance-fund constraints, so the remaining path was resolved against ranked opposing positions |
What to verify after the event
- final position sizes are zero or reduced as expected
- collateral and strategy updates match the liquidation outcome
- any insurance-fund-adjacent effects are reflected in strategy-side reconciliation
- you understand whether the path stayed normal or entered ADL
- your next exposure is based on current account state, not stale pre-liquidation assumptions