A liquidation is a forced closure of an open margined position. It gets triggered by the mark price hitting the liquidation price.
At the liquidation price, margin levels drop below the maintenance margin ratio.
Depending on your position tier, a liquidation can either be partial or full.
What is partial liquidation?
If your position Tier is 3 or higher, partial liquidation is triggered when the Margin Ratio is lower than the required maintenance margin ratio.
Once triggered, the liquidation engine will take over the account and implement a closing procedure.
Partial liquidations reduce the position size until it is at Tier 1.
What is full liquidation?
There are two triggers for full liquidations:
- Your maintenance margin ratio drops below the required level at position Tier 2 or lower. 2.
- Your position Tier is 3 or higher, and your maintenance margin ratio drops below what’s required for position tier 1.
Once triggered, the liquidation engine takes over the account and implements a closing procedure dependent on the type of margin account mode.