1.What is forced-liquidation？
Auto-liquidation is when the positions are automatically liquidated by the system when the margin rate drops below 30%, and will remain as such till the margin rate goes back to 30%.
2.Why is forced-liquidation so serious?
Auto-liquidation will result in losses when the user is in the following two situations:
1) Going long while doing a leveraged trade:
When auto-liquidation happens, your current trading pairs will be sold at its current price, till the margin rate reaches above 30%. Since auto-liquidation happens when the direction is reversed, your sold price will definitely be less than the bought price, hence resulting in a loss.
2) Going short while doing a leveraged trade:
When auto-liquidation happens, your current trading pairs will be bought at its current price, till the margin rate reaches above 30%. Since auto-liquidation happens when the direction is reversed, your bought price will definitely be higher than the sold price, hence resulting in a loss.
3.Forced-liquidation warning trigger:
When the margin rate falls below 60%, you will receive a liquidation warning notice via the website notification system and to your email, to remind you to increase the margin amount.
Please take note of your account balance, and increase or decrease your assets accordingly to prevent loss from auto-liquidation.
4.How to calculate margin rate?
Margin rate = (Total Margin - Floating Loss) ÷ Frozen Margin
Frozen margin = Current position amount (successful transactions) + open orders (unfinished transactions).
For example:
If you have 500USD in your margin account, then your total margin will be 500USD.
Now imagine that you have 100USD under positions and 50USD under open orders. Then, assuming that the 100USD brought you 200USD of profit.
Hence, your margin rate = (500+200)÷(100+50)= 466%
Note: The difference between holding positions and open orders is that assets in the holding positions belong to the user, so there will be profits and loss.
Please be reminded that the value of the frozen assets will fluctuate according to the market price. Please leave enough margin to prevent the system from your positions from being liquidated.
5.Recap
1）Positions: Position is the act of buying or selling an asset in hopes to gain profit. Traders can buy positions in 2 directions - long and short. If they have believe that the asset price has potential to increase in the long run, they can choose to go long by buying the asset at a lower price and selling it when the price increases. On the contrary, if they predict that the asset price will fall, they can play it to their advantage by going short, meaning that they can sell the asset at a higher price and buy it back when it falls to a lower price. Both ways allow the traders to make a profit regardless of a rising or falling market.
DigiFinex users will be able to see relevant information about their trading pair on the DigiFinex “Exchange” page under the “Positions” tab, such as the direction, amount, P/L, and LIQ price.
2）Closed position:A position is closed when the trade direction is reversed. If the trader opened the position by going long, then selling the assets at a higher price will close the position. Conversely, if the trader opened the position by going short, then buying the assets back at a lower price will close the position.
If the number of assets sold or bought in reverse is equal to the number of assets held in the position, then it is a fully closed position. If the reversed quantity is less than the position quantity, it is a partially closed position. When the reversed quantity is greater than the position quantity, it will be an exceeded closed position.
3）Profit/Loss (P/L): The profitor loss is calculated based on the latest market strike price against the user’s strike
When users hold a long position, they will gain profits if the market price is higher than the user’s average price, and incur losses if the market price is lower than the user's average price.
Conversely, when the user holds a short position, profits will be greater when the market price is lower than the user’s average price, and losses will be greater when the market price is higher than the user’s average price.
How to ask for help：
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Tips, beware of false customer service:
1). Do not provide account password, SMS, Google verification code, WeChat and bank card password to anyone including DigiFinex Exchange Customer Service
2). Please look for the official website: Digifinex.vip & DigiFinex.com
3). Don't click on the unofficial link, beware of computer poisoning information leaks.
4). The DigiFinex exchange staff will not ask you to transfer the payment.
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