Glossary
What is Auto-deleveraging (ADL)
The exchange closes a profitable position at another trader's bankruptcy price if the fund cannot cover a liquidation loss; top profit and leverage go first.
How it works
Example
Your 1 BTC long from 60,000 is in profit with price at 62,000. A large short went bankrupt, the fund could not cover the hole, and the exchange closed your long at 62,000: the $2,000 gain is booked, but the position is gone.
Common mistake
Treating ADL as your own liquidation: you did not lose your margin, you were closed to cover someone else's loss, and the rest of the move happens without you.
Read next
Related terms
Frequently asked questions
- Where can I learn Auto-deleveraging (ADL) step by step?
- In the Trading OS Academy: “Leverage is sizing, not greed”.
- What is Auto-deleveraging (ADL) related to?
- Liquidation; Insurance fund; Bankruptcy price; Leverage.
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