Science Popularization Topic: How is a warehouse explosion completed Bursting positions is a fate that traders cannot escape. What are the situations that occur when a warehouse is liquidated? Increased heart rate, elevated blood pressure, sweaty hands, muscle tension, gastrointestinal discomfort, may be accompanied by headaches or fatigue. Cognitive dissonance leads to denial of reality, excessive backtracking of decisions, decreased self-efficacy, and affects judgment. No, no, no, today is not about popularizing physiology and psychology, but about... indicators. Let's dive in! ⬇️ 'liquidation', the Chinese word looks very eye-catching and makes me feel nauseous after reading for a long time. The English word is' liquidation ', which literally means' clearing'. This makes me feel more comfortable. It refers to the forced liquidation of positions with insufficient margin coverage. When a warehouse explosion occurs, if there is a slow motion replay, then you can see clearly what happened. Whether it is CEX or DEX, the liquidation process is basically the same, with the difference being the liquidation rules and the subsequent attribution of liquidation funds. Today, let's go through the terms and procedures encountered during the process of liquidation together. It's okay to lose money, but we can't die in ignorance. Next time, I will definitely win. Bursting a warehouse is not an instant process, it is actually a process. open a position Many people don't know that the cause and effect of the liquidation has already been buried since the opening of the warehouse. You deposit margin, leverage, and choose direction. At this point, you have reached the battlefield and your risk has been calculated clearly. fluctuation The price began to rise and fall, the position showed fluctuating gains and losses, the account net value changed, and around the margin rate, the account tested back and forth on the edge of liquidation. trigger If the margin rate drops below the initial margin requirement, an additional margin notice will be issued, which is a critical notice and allows for the option to increase or decrease positions. Qiang Ping When the margin rate further decreases, the system will forcibly liquidate the position according to different rules, and a death notice will be issued funereal arrangements Don't worry, it's not over yet. After the forced liquidation, you may even owe money, and the subsequent liquidation fees are worth participating in / A warehouse explosion has been completed, and in this process, it is necessary to have a clear understanding of the following terms and conditions that need to be tested. Regarding Position and Margin -Margin: margin, used to cover potential losses - Initial Margin：IM， Initial margin, minimum ratio required for opening a position - Maintenance Margin：MM， Minimum margin required for holding positions -Isolated margin: margin per position, independent position, risk isolation -Cross Margin: Full margin, account sharing profit and loss offset -Equity: Equity=Assets - Liabilities, used to calculate margin ratio -Collateral: assets pledged to the exchange as collateral -Haircut: Discount, actual discount on collateral -Leverage: Using borrowed funds to increase the size of a position -Position: Position, number and direction of contracts held -Notional Value: Total value of position=Position size x Market price Regarding risk monitoring and calculation -Margin Ratio: Margin Ratio, (Equity/Position Value) x 100% - Margin Fraction：MF， Ratio of equity to total nominal position -Unrealized PnL: unrealized profit and loss, floating profit and loss of positions -Mark Price: Mark price, adjusted price based on index price -Index Price: Weighted average of multiple exchange prices -Risk Limit: Risk limit, maximum account position size limit Regarding liquidation and execution -Liquidation: liquidation/liquidation, the process of forced liquidation by the exchange -Forced Liquidation: Forced liquidation, automatic closure of leveraged positions -Margin Call: Additional margin, notification when margin rate falls below threshold - Auto-Deleveraging：ADL， Automatic reduction of inventory -Insurance Fund: used to cover the remaining losses after liquidation -Liquidity Price: liquidation price ≈ opening price × (1 ± 1/leverage) Regarding Futures Contracts -Futures Contract: Futures Contract -Perpetual Futures: Perpetual futures with no expiration date -Funding Rate: The funding rate is paid periodically by both long and short parties - Take Profit：TP， Take profit, automatically close orders, lock in profits - Stop Loss：SL， Stop loss, automatically close orders, limit losses There are too many things I can't remember, it's okay, I'll remember them all after a few overstocks... Kidding, I've compiled a PDF and can download it here or bookmark this article for review when needed. Collection of Clearing Terms PDF / - https://drive. (google.com)/file/d/1qYEfskxvpNWMkMlhH8KBA5oiXxC2uQ_n/view? usp=sharing So how to avoid a warehouse explosion? Follow me, we will continue to popularize science in the next issue. Wishing you, my friend, never to explode. / Author: Anymose | A Soft Core Science Popularization Writer This article is for educational purposes only and does not constitute any investment advice. Always remember DYOR!