Risk & Liquidations
Perpetual contract trading involves leverage, which amplifies both potential gains and potential losses.
When losses exceed the margin available to support a position, liquidation may occur.
Understanding liquidation mechanics is critical to managing trading risk on 6MM.
What Is Liquidation?
Liquidation happens when the margin balance of a position falls below the maintenance margin requirement.
When this occurs:
The system forcefully closes the position
The goal is to prevent further losses and protect system stability
Liquidation is a risk management mechanism, not a penalty.
What Causes Liquidation?
Liquidation may occur due to:
Adverse price movement
Excessive leverage
Insufficient available margin
Accumulated fees or funding payments
High leverage significantly increases liquidation risk.
Mark Price–Based Liquidation
6MM uses the mark price, not the last traded price, to determine liquidation.
This helps:
Reduce liquidations caused by short-term price spikes
Improve fairness during volatile market conditions
The mark price reflects a more stable market reference.
Liquidation Process
When risk increases, the system may follow these steps:
Margin ratio rises as unrealized losses increase
Risk warnings may be triggered (if supported)
Partial position reduction may occur
Full liquidation is executed if risk continues to escalate
Exact behavior depends on partner configuration.
What Happens After Liquidation?
After liquidation:
The position is closed
Remaining margin (if any) is returned to the 合约账户
Trading fees and losses are deducted
In extreme market conditions, additional risk mechanisms may apply.
How to Reduce Liquidation Risk
Use lower leverage
Maintain sufficient available margin
Set Stop Loss orders early
Monitor margin ratio regularly
Avoid trading during extreme volatility
Risk management is more important than trade frequency.
Liquidation vs. Stop Loss
Triggered by
User-defined price
System margin threshold
Purpose
Limit losses
Prevent negative balance
Control
User-controlled
System-enforced
Stop Loss helps prevent liquidation, but cannot fully eliminate risk.
Summary
On 6MM:
Liquidation protects both users and the system
Risk is managed in real time using mark price and margin rules
Responsible leverage use is essential
Understanding liquidation mechanics is a key step toward safe and sustainable perpetual trading.
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