How does liquidation work in futures trading?

When your maintenance margin ratio is less than or equal to 100%, the actual liquidation price will be calculated, and your position may be liquidated or partially reduced. The estimated liquidation price will change continuously, and the estimated liquidation price shown in your position is for reference only.

To improve market stability and reduce unnecessary liquidations during abnormal price movements, the liquidation price is based on the mark price. You can view historical mark price trends by switching the candlestick chart. Liquidation affects only your trading account and does not impact your funding account.

What is maintenance margin requirement (MMR)?

The maintenance margin requirement is an indicator that reflects the safety level of a position. The higher the maintenance margin requirement, the safer the position.

Spot and futures mode + Cross margin trade

• MMR= (Total balance of this asset in cross margin + Cross margin return - Pending sell order quantity of this asset - Required quantity of this asset for options buy orders - Required quantity of this asset for isolated margin positions - All maker fees) / (Maintenance margin + Liquidation fee).

• Liquidation fee = Leverage borrowing fee + Expiry/Perpetual delivery fee + Options fee

• Leverage borrowing fee = Borrowed position value * Customer's taker fee rate

• Expiry/Perpetual delivery fee = Expiry/Perpetual position value * Customer's taker fee rate

• Options fee = Options position value * Customer's taker fee rate

Multi-currency margin mode + Cross margin trade

• MMR = Effective margin / (Maintenance margin + Deleveraging fee)

• Maintenance margin = Amount of positions held + Open orders

• Deleveraging fee = Amount of positions held + Open orders

Multi-currency margin mode + Isolated margin trade

• MMR = (Margin Balance + return) / (Position Value * (position tiers Maintenance Margin Ratio + Fee Rate) )

Crypto-margined futures

• MMR = (Margin Balance + Return) / (Face Value * |Number of Contracts| / Mark Price * (Position Tiers Maintenance Margin Ratio + Fee Rate))

USDT-margined

• MMR= (Margin Balance + return) / (Face Value * | Number of Contracts | * Mark Price * (Position Tiers Maintenance Margin Ratio + Fee Rate))

Why are my positions liquidated or reduced?

• In both Cross Margin and Isolated Margin modes, if the market moves against your position and your maintenance margin ratio (MMR) falls to 100% or below, the system may trigger forced position reduction or liquidation.

• If your position is at tier 3 or above and the MMR falls below the current tier requirement (with liquidation fees) but remains above the minimum tier requirement, the system will reduce part of your position instead of liquidating it entirely. This process continues until the margin requirements are met.

• If your position is at tier 2 or below, or if the MMR falls below the minimum tier requirement, the system will directly liquidate the position at the bankruptcy price.

• This mechanism helps reduce risks caused by extreme market volatility, such as chain liquidations.

• After liquidation starts, the liquidation engine takes over the position. Your maximum loss is limited to the margin allocated to the liquidated position.

When will liquidation be triggered?

When the maintenance margin ratio is ≤ 100%, it means your account equity is no longer sufficient to cover the MMR and potential liquidation fees, and the system will trigger liquidation.

Does OKX still have a loss sharing mechanism for futures trading?

No, OKX no longer uses loss sharing mechanism. Instead, the platform uses an Auto-Deleveraging (ADL) mechanism.

What is ADL?

ADL is a risk-control mechanism used in extreme market conditions or force majeure events, when the risk reserve becomes insufficient or drops sharply. It is currently defined as a 30% straight-line decline from its peak within 8 hours but this threshold may be adjusted based on market conditions.

How does ADL work?

When ADL is triggered, liquidation and position reduction are no longer handled through the market order book. Instead, the system directly matches with the highest-priority counterparty and executes the reduction at the current mark price. The counterparty’s position is reduced, and the resulting profit or loss is credited to their account balance.

Notifications & records

If your position is auto-deleveraged, you will receive SMS and email notifications. You can also view the details in the report center, where the account history type is labeled auto-deleveraging

To learn more, click the link: Introduction to the Auto-deleveraging Mechanism

What is the risk reserve?

The Risk Reserve is a fund used by OKX to cover losses from forced liquidations and prevent bankruptcy risk.

• It is funded by OKX and remaining margin from liquidation orders.

• Risk reserves are kept separate by business line (margin, futures, perpetual swaps, and options), and also by futures and crypto within each line.

• Every day at 16:00 (HKT), the platform settles profits and losses from forced reductions and liquidations from the past 24 hours and updates the risk reserve accordingly.