In some exchanges, when the market fluctuates a lot and some users account bankrupt after forced liquidation, the exchange will allocate the loss to users to share. Bankruptcy means after the position got forced liquidation the account is still not able to repay all the fund borrowed from exchange; loss-sharing means that some exchanges calculate the total loss in the system, and at the time of contract delivery, share the loss in proportion to all the profitable accounts or to even the trading users with positions but without profits.
In BW trading contracts, BW protects you through risk reserve fund and automatic position reduction mechanism. BW trading contracts such risk-sharing after bankruptcy.
Risk reserve fund
Risk reserve fund is to make up for the loss caused by the user's “position bankruptcy". Under the protection of the BW risk reserve fund, users will not have account go bankruptcy and owe platform money after forced liquidation.
When a user's contract position is triggered for forced closing, the position will be forced close by the matching engine at the bankruptcy price.
If the forced closing order can close the position at a price better than the bankruptcy price, the additional funds will be injected into the risk reserve fund;
If the price fluctuates violently and exceeds the bankruptcy price, the order cannot be closed at the bankruptcy price, then BW will spend the risk reserve fund and try to close the position in the market, and use the risk reserve fund to make up the loss caused by the closeout. The user will not experience owing money after position bankruptcy.
In most cases, the market does not fluctuate extremely, users will not bankrupt after forced liquidation, and the risk reserve fund will gradually accumulate; in the case of extreme market fluctuations, the risk reserve fund will be reduced due to making up for the user's “position bankruptcy" loss. BW contract risk reserve fund is open and transparent.
As high leverage and high-risk product, BW exchange has a perfect risk control system to protect the interests of users as much as possible.