Exchange risk control measures

Coinstore will take various risk control measures to protect customer rights. Currently, most exchanges, including Coinstore, will take the following measures:

1.Risk limit
2.Auto-Deleveraging (ADL)
3.Liquidation
4.Insurance fund

1. Risk Limits

1. Coinstore uses risk limits for all trading accounts, which can reduce the possibility of liquidation of large positions.

If some traders hold large positions, they will bring risks to other users. If their positions are forced to be liquidated, other users may experience automatic position reduction events. The risk limit has a step-by-step increase mode, which will help avoid this situation. It will increase the margin requirements for large positions.

2.Risk Limit Step:

2. ADL

When the insurance fund cannot take over the position of the user who has been liquidated, automatic position reduction will occur.

For users, the ADL indicator in the position can be used to determine whether there is a risk of automatic position reduction.

When automatic position reduction occurs, Coinstore will immediately notify the affected users. At this time, the user's position will be closed at the bankruptcy price. If the user has unfulfilled orders, these orders will be cancelled. When the automatic position reduction is completed, the user can reopen the position at any time.

Note that the bankruptcy price may not be within the transaction price range of the contract market, so we recommend that users always pay attention to the ADL indicator to avoid automatic position reduction.

Users are ranked in priority based on the absolute profit amount of their positions. Usually, users with the most unrealized profits will be given priority for automatic position reduction.

ADL steps:

1.Calculate the amount of automatic position reduction required to compensate for the user's position loss.
2.Based on the amount, calculate the users who need to reduce their positions and the number of positions that need to be reduced.

The platform will manage the user's position at the opening price of the user who has automatically reduced his position and close the position at the bankruptcy price. The realized profit and loss is used to subsidize the user who has been liquidated.