When an investor is forced to close a position, their surplus will be taken over by MEME's Forced Close Out system. If a forced liquidation position is not able to close in the market and when the marker price reaches the breakeven price, the automatic position reduction system will reduce the positions of investors holding positions in the opposite direction. The order of position reduction will be determined by the leverage and profitability ratio. The Auto-Deleveraging will be based on the breakeven price of the forced position.
What is a loss on a position closeout
Disadvantages of Shared Loss Mechanisms
What is Auto-Deleveraging
Procedure of the Auto-Deleveraging mechanism
Advantages of the Auto-Deleveraging system
Comparison of the Auto-Deleveraging mechanism with the Shared Losses mechanism
How to reduce the risk of Auto-Deleveraging
Traders can reduce the risk of Auto-Deleveraging by reducing leverage or closing out some of their profitable positions.
Calculation of Auto-Deleveraging queue ranking factor
The sorting factor is calculated as follows：
Note: The Auto-Deleveraging system sorts the long and short positions from highest to lowest.