🌡️Liquidations, Margin Management (CVA), and Account Health
Liquidations
A liquidation event occurs when a trader's account and positions are forcibly closed by a liquidator due to insufficient margin in their account to cover unrealized losses.
This happens when the trader's positions move against them to the point where the Equity Balance falls below the Maintenance Margin (CVA).
Warning: Accounts at IntentX operate in cross-margin. Meaning Equity Balance takes into consideration the entire account balance, and liquidations will result in the entire account balance to be lost. Users can create isolated sub-accounts to better manage their liquidation risk.
Our "Account Overview" tab on the main trading page provides critical indicators to help users manage their account health.
Estimated Liquidation Prices
IntentX assists users in estimating liquidation prices for their new and open positions. This is an estimate only, and the values will change dynamically based on your account balance, and other open positions.
When opening a new trade positions, traders can see their estimated liquidated price in the trade details:
When users trades are open, they can view their estimated liquidation prices in the "Positions" tab:
Warning: As accounts are in cross-margin, there is no true liquidation price for your positions, but rather, users should monitor their Remaining Equity to Liquidation to ensure their account is not liquidated. Calculations for estimated liquidation price are complex and intend to serve as an indicator only, it is possible that your account is liquidated before this price is reached.
Account Health
Account Health is a percentage that represents the overall health and risk level of a trader’s position. It provides a quick glance at the safety buffer a trader has before facing liquidation.
Calculation:
Formula: Account Health = (equity - maintenanceMargin) / (allocatedBalance - maintenanceMargin)Maintenance Margin (CVA)
CVA is the overall Maintenance Margin required for your account to remain solvent. Users should take care to understand the CVA, and maintain their account Equity Balance to not fall below this value, otherwise the account will be liquidated.
In the event of liquidation, the entirety of the account CVA is lost / remit to the counterparty subject to liquidation.
When opening a trade position, users are required to deposit a corresponding CVA amount based on their position size, contract, and leverage used.
This Maintenance Margin (CVA) is the collateral required for each trade opened on the platform.
The total CVA amount of your open positions is shown on the "Account Overview" tab:
Equity Balance
The Equity Balance amount is the total account balance at any given moment, factoring in all of your open positions.
Equity Balance is the sum of the trader’s account balance and Unrealized Profit and Loss (uPNL).
Warning: When your Equity Balance amount falls below your Maintenance Margin (CVA), your account is liquidated and your CVA amount locked in the trades is forfeit.
Equity Balance Calculation:
Formula: Allocated Balance + uPNLRemaining Equity to Liquidation
The Remaining Equity To Liquidation indicator shows you how much equity balance you have remaining before your accounts balance is liquidated.
Warning: When the Remaining Equity To Liquidation falls to 0, your entire account is liquidated.
Remaining Equity to Liquidation Calculation:
Formula: Equity Balance - Maintenance Margin (CVA)Available for Orders
Represents the user available funds to open orders with and their total allocated amounts.
Formula: Available for Orders = Equity Balance - Locked Margin - Maintenance Margin
Conclusion
Understanding and effectively managing Account Health and margin is crucial for traders on IntentX. By keeping a close eye on these metrics, traders can make informed decisions, manage risks proactively, and navigate the markets more successfully.
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