a guest Dec 11th, 2017 55 Never
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- Yesterday we saw similar movements across multiple markets. This was not a sudden drop in a single market, but a panic across multiple markets. In a situation like this, we have to liquidate positions. If we would not there is a serious risk of a large group of margin traders losing more than can be covered by the collateral held. When the loss of a position causes the leverage ratio to become lower than 15%, the platform will liquidate positions. This could result in all collateral held in an account to be used to cover for the incurred losses. During volatile markets, slippage can be substantial.
- We do have protection measures to prevent flash crashes and those were precisely why the dropping markets did not drop further than they did, all the way to near 0.
- There was no malfunction in matching trades nor with mechanisms to slow down the drops on multiple markets. Your position was liquidated as it should be.
- Trading is a 0-sum game. We cannot start compensating users who trade leveraged positions and see their position liquidated. If we would we would soon have every user that gets liquidated request a compensation and users would start to trade at maximum leverage all the time. If the market moves in the right direction the profit would be theirs to keep. If they would see their position liquidated they would claim a loss caused by us not protecting the market. If we take this route, we would soon be forced to start socializing losses to our funding providers as losses would be realized and someone will need to pay for them.
- Market movements like this are part of what regularly happens in cryptocurrency markets. We do what we can to offer efficiently functioning markets but if we would interfere too much with how the markets move, we would affect price discovery and we will be accused of market manipulation. When trading leveraged in highly volatile markets, there is a risk of being liquidated during sudden market movements. Users need to understand this before deciding to start trading leveraged positions, or, should decide to only trade in the exchange context.
- The liquidation price displayed in the UI is not a guaranteed price a user will see his position liquidated at, but rather an indicative price of when a liquidation is triggered. Depending on the state of the orderbook, the liquidation order gets executed against bids or asks available in the orderbook at the time the liquidation order gets inserted. If orderbooks are thin, slippage is expected to occur.
- We do understand that you are completely overwhelmed by what happened. And we are sorry you lost money. I wish we could bring you better news, but we cannot compensate you or any other user who sees his position liquidated in a market like we saw yesterday.
- Kind regards,
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