Liquidation

Liquidation of positions in Dywe

1. Definition of liquidation

Liquidation is the automatic closing of a trader's position initiated by the platform when the margin balance falls below the minimum acceptable level. This occurs in the event of an unfavourable movement in the price of an asset, where the current value of the collateral does not cover the loss, posing a liquidity risk to the platform.

2. Types of liquidation

2.1 Full liquidation

Full liquidation is carried out when the trader's margin balance falls below the set level of maintenance margin. In this case, the system closes the entire open position at the market price to prevent a negative balance.

Full liquidation mechanism:

1. Determining the actual margin balance of the user.

2. Checking compliance with margin requirements.

3. If the balance is below the critical level, the position is closed at the current market price.

4. The funds generated from the closing are used to repay the debt.

2.2 Partial liquidation

Partial liquidation is used when full closing of a position is not required. In this case, the system closes only a part of the position, reducing the trader's liabilities and maintaining the required margin level.

The mechanism of partial liquidation:

1. Determination of the margin deficit.

2. Calculation of the necessary position reduction to restore the margin balance.

3. Closing part of the position at the market price.

4. Recalculating the available margin balance and updating the position data.

3. Liquidation conditions and parameters

• Liquidation price is the price level at which an asset reaches the liquidation threshold. It is calculated on the basis of the leverage involved and the level of margin collateral.

• Margin requirements - the minimum acceptable level of collateral required to maintain open positions.

• Execution priority - liquidation is executed at the market price, which may lead to deviation from the expected execution price.

4. Liquidation Automation

The Dywe liquidation system operates in automatic mode and does not require user intervention. All calculations are performed in real time, striking a balance between protecting the liquidity of the platform and reducing risks for traders.

Liquidation is carried out in accordance with the platform's internal algorithms, which are oriented towards preventing systemic risks and maintaining the stability of the trading environment.