Will the ProBit Global perpetual contract liquidate?

ProBit Global's perpetual contract liquidation mechanisms aim to protect the exchange by automatically liquidating positions exceeding margin requirements to prevent losses.

Nov 30, 2024 at 11:20 pm

Will the ProBit Global Perpetual Contract Liquidate?

Understanding Perpetual Contracts

• Perpetual contracts are crypto derivatives resembling futures contracts with no expiration date.
• They allow traders to maintain positions indefinitely, subject to funding rate adjustments.
• The funding rate ensures that perpetual contracts track the underlying spot price.

ProBit Global's Perpetual Contract Mechanisms

• Automated Liquidation: If a trader's position exceeds their available margin, the system automatically liquidates it to protect the exchange.
• Margin Call Threshold: The margin call level triggers an alert when a trader's margin balance falls below a certain threshold.
• Margin Level: This indicator represents the ratio between the trader's margin balance and the contract's notional value. A low margin level increases the risk of liquidation.

Assessing the Risk of Liquidation

• Market Volatility: High volatility increases the probability of rapid price swings, which can affect both unrealized profits and margin requirements.
• Leverage: Using high leverage amplifies the impact of price movements on margin balance.
• Funding Rate: Adverse funding rates can gradually deplete margin balances over time.
• Position Size: The larger the position, the higher the potential margin requirements.

Preventing Liquidation

• Manage Leverage: Use prudent leverage levels based on risk tolerance and market conditions.
• Monitor Market Conditions: Stay aware of relevant news and price action to anticipate potential volatility.
• Utilize Stop-Loss Orders: Place stop-loss orders to automatically limit potential losses.
• Maintain Adequate Margin: Ensure sufficient margin balance to cover potential price fluctuations.

Steps to Avoid Liquidation on ProBit Global

1. Choose a Suitable Leverage Level:

   • Determine an optimal leverage that aligns with your risk appetite and market volatility.
   • Consider using a lower leverage during periods of significant market turbulence.

2. Monitor Margin Level Regularly:

   • Track your margin level closely and monitor it at least hourly during volatile market conditions.
   • Aim to maintain a margin level significantly above the margin call threshold.

3. Manage Position Size:

   • Enter into positions with sizes appropriate for your risk profile and margin balance.
   • Avoid overextending your position size, as it increases the chances of margin depletion.

4. Consider Funding Rates:

   • Be aware of potential funding costs associated with perpetual contracts.
   • Adjust positions accordingly or seek alternative strategies to mitigate the impact of adverse funding rates.

5. Utilize Stop-Loss Orders:

   • Place stop-loss orders at strategic price levels to prevent catastrophic losses in the event of a sharp price fall.
   • Regularly evaluate and adjust stop-loss levels based on market conditions.

6. Close or Reduce Positions During Volatility:

   • If market conditions become excessively volatile, consider closing or scaling down your positions to reduce the risk of liquidation.
   • Avoid holding large positions during periods of high uncertainty or unexpected events.

7. Communicate with Customer Support:

   • In case of any concerns or questions, do not hesitate to reach out to ProBit Global's customer support for assistance.
   • They can provide guidance and support in managing your positions and avoiding liquidation.