Everstrike employs a state-of-the-art incremental liquidation system. Positions are liquidated one by one, incrementally (10% at a time). Rarely does the trader lose all of his remaining equity upon liquidation, as is the case on many other trading platforms. Often, only a single position will need to be liquidated, and only a small part of it will need to be sold off (10%). In most cases, this will be enough to bring the trader's account back in good standing - at which point liquidation stops.
When Cross Margin is enabled, liquidation is guided by the account-wide Minimum Maintenance Margin requirement. If the account-wide Gross Position Margin drops below this requirement, active positions can become subject to liquidation.
When Isolated Margin is enabled, liquidation is determined on a position-wide basis, rather than on an account-wide basis. If the Gross Position Margin of a specific position drops below the Minimum Maintenance requirement for this specific position, the position can become subject to liquidation.
How Liquidation Works
Everstrike's liquidation system works in the following way:
If a position is flagged for liquidation, the system will gain temporary control of the position and evaluate whether or not to close it out.
If the position can be closed out a favorable price (based on the present market conditions), the system will submit an Immediate Or Cancel (IOC) order on behalf of the trader for 10 percent of the position size, or 1,000 USD (whichever is higher). If this order is filled, the size of the position will be reduced by a minimum of 10 percent.
Because the size of the position is now smaller, both the account-wide and position-wide Minimum Maintenance requirements will also be smaller. In other words, the leverage of the position/account has been decreased.
Due to the lowered Minimum Maintenance requirement, it is likely that the position will now exit liquidation. In that case, control of the position will be returned to the trader. In case the new Minimum Maintenance requirement is still above the trader's Gross Position Margin, the process above will be repeated once more.
The Goal of the System
The goal of the system is two-fold: Protect the equity of the trader and ensure that the trader never ends up with negative balance. If the market conditions are unfavorable for the trader, the system will wait until the conditions are sufficiently favorable, before selling off any part of the position.
Whether the conditions are deemed favorable or not will depend on the current market depth, the estimated average fill price of any potential orders and the execution price of recent trades on the given trading pair. The exact relationship between these, and the reason that it leads to a better fill price for the trader, is a trade secret that Everstrike does not make public.
What It Means For You
If your position has entered liquidation, a small warning sign will appear next to the position in the trading interface. While this warning sign is there, it is not possible for you to submit new orders on the position, or cancel existing orders on the position.
You may, of course, top up your Gross Position Margin. In Cross Margin mode this happens by depositing additional assets to your trading account. In Isolated Margin mode, this happens by manually topping up the affected position (dragging the leverage slider to the left). This will increase your Gross Position Margin, and potentially bring your position out of liquidation. You may not further increase the leverage.
When your position exits liquidation, the warning sign will disappear. You may submit new orders on the position 1 minute after your position has exited liquidation.
In an effort to bring your position out of liquidation, the system may attempt to submit orders on your behalf. The quantity for such orders is determined by the following formula:
Order Quantity = Min(Position Size, Max(0.1 * Position Size, 1,000 USD))
Any orders submitted by the system are transmitted to you in real time, and you may check the details of them in your orders overview. Once the Minimum Maintenance Margin requirements are satisfied, your position will exit liquidation, and you will regain control of it.