ADL automatic position reduction is the most common risk control mechanism for perpetual contracts.
ADL automatic position reduction initiated:
When there is a position liquidated in the market, the liquidation order is sent to the market by the liquidation engine to wait for a deal. If there is no deal within the specified time range, ADL will automatically reduce the position.
ADL automatic position reduction object:
ADL automatic position reduction will take priority on the most aggressive positions of the positioning strategy.
The position of the ADL automatic reducing position will enter the market and be entrusted to initiate the ADL automatic reducing position.
ADL automatic risk reduction display:
There is an ADL automatic reduction lightening indicator on the front page of the BW perpetual contract.
ADL automatic lightening indicator
After the trader holds the position, the indicator lights up, and the more the number of lights, the more the position is in the ADL queue. When the opposite position bursts and the ADL automatic reduction is finally initiated, the probability of the position being executed by the ADL automatic reduction The higher.
Reduce the probability of being automatically reduced by ADL:
The probability of the position being executed by ADL will be automatically reduced by reducing the position leverage. For example, take the initiative to add a margin to the position, or part of the take profit.
Note: ADL automatically reduces positions with a large probability of making a profit, and a small probability of stop loss.
In addition to ADL's automatic position reduction, common contract market risk control mechanisms include: "amortization mechanism", "advance liquidation mechanism" and so on.
The BW perpetual contract risk control mechanism is the ADL automatic lightening mechanism.