The Perpetual Contracts at BaseFEX can be leveraged up to 100x. You need to hold a certain percentage of the value of a position to keep it open, which is the Maintenance Margin percentage. You can check the minimum Maintenance Margin requirements at Risk Limits.
In such cases when you are not able to fulfill your maintenance requirement, you will be liquidated and lose your Maintenance Margin.
You can check the liquidation price of your position under the Open Position Tab. You can also change your liquidation price by adding extra margin through the Leverage Sliders or Risk Limits.
Minimization of Liquidations
In order to avoid liquidation caused by price manipulation and market liquidity, BaseFEX employs the Fair Price Marking mechanism.
Risk Limits require higher margin levels for larger position sizes. At BaseFEX, the liquidation engine takes more margin to ensure the closing of large positions. If the condition is positive, larger positions will be liquidated gradually.
Once a liquidation happens, BaseFEX will cancel any open orders on the current contract to release the margin and keep this position. Your orders on other contracts will not be affected and will still remain open.
At BaseFEX, your position will not be fully liquidated at once, because the platform takes a gradual model for liquidation that automatically tries to reduce the Maintenance Margin requirements.
Users with the lowest risk limit
The following will occur to users with the lowest risk limit.
- BaseFEX cancels all the open orders in the contract.
- If the maintenance margin cannot be fulfilled, the position will be liquidated by the liquidation engine at the bankruptcy rate.
Users with high risk limit
The liquidation system will try to change your risk limit to a lower level, and then the maintenance margin requirements will be reduced through:
- Trying to maintain your current order and position, but lowering your risk limit.
- Cancelling your open orders and then lowering your risk limit down to match your current position.
- Submitting a Fill or Kill order of the difference between the current risk limit position size and the position size to satisfy the margin requirement to avoid liquidation.
- If the position is still at risk for liquidation, the liquidation engine will take over it and close this position at the bankruptcy price.
System Profits and Losses
Once BaseFEX can liquidate your position at a price better than the bankruptcy price, the extra funds will be added to our Insurance Fund.
If the position cannot be liquidated at the bankruptcy price, BaseFEX will take funds from the Insurance Fund to close the position. If the position still cannot be liquidated, the Auto-Deleveraging mechanism will be triggered.