Huobi DM Launches Partial Liquidation as Market Volatility Increases
- The feature will be available to all trading pairs on the platform without any fees.
Huobi DM, the derivatives platform of the spot exchange giant, has updated its liquidation mechanism to minimize the risks in the volatile market.
Announced on Thursday, the platform will now offer partial liquidation, meaning the mechanism will gradually reduce a user's positions rather than liquidating them in full in a single event.
In the traditional futures platforms, liquidation is triggered in full at the moment a user's margin ratio is equal to or less than zero. This puts the traders at huge risk as a sudden market swing will immediately liquidate highly leveraged positions, causing extensive loss to the trader.
Better to be cautions
To prevent such risks, Huobi's new mechanism will automatically start liquidating a user's positions in stages—at predetermined margin ratios determined by the user's calculated exposure—until the margin ratio reaches above zero.
The liquidation process also includes a circuit breaker function that halts liquidation when large or unusual deviations between the liquidation price and market price are detected.
Commenting on the new mechanism, Ciara Sun, VP of global business at Huobi Group, said: "Market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term creates new arbitrage opportunities for users, but it can also lead to unnecessarily high-risk circumstances if the right measures aren't in place to protect them. Our goal is to safeguard our users' assets while providing a robust trading experience, so we're using this partial liquidation mechanism to minimize the downside without diluting the potential upside."
The new liquidation process will be applicable to all the trading pairs listed on the platform.
With the recent turmoil in the global markets due to COVID-19, the crypto markets also saw a massive downturn with a significant increase in volatility. Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term recently shed around 40 percent of its gains achieved in months after the long bear in the market.
Huobi DM, the derivatives platform of the spot exchange giant, has updated its liquidation mechanism to minimize the risks in the volatile market.
Announced on Thursday, the platform will now offer partial liquidation, meaning the mechanism will gradually reduce a user's positions rather than liquidating them in full in a single event.
In the traditional futures platforms, liquidation is triggered in full at the moment a user's margin ratio is equal to or less than zero. This puts the traders at huge risk as a sudden market swing will immediately liquidate highly leveraged positions, causing extensive loss to the trader.
Better to be cautions
To prevent such risks, Huobi's new mechanism will automatically start liquidating a user's positions in stages—at predetermined margin ratios determined by the user's calculated exposure—until the margin ratio reaches above zero.
The liquidation process also includes a circuit breaker function that halts liquidation when large or unusual deviations between the liquidation price and market price are detected.
Commenting on the new mechanism, Ciara Sun, VP of global business at Huobi Group, said: "Market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term creates new arbitrage opportunities for users, but it can also lead to unnecessarily high-risk circumstances if the right measures aren't in place to protect them. Our goal is to safeguard our users' assets while providing a robust trading experience, so we're using this partial liquidation mechanism to minimize the downside without diluting the potential upside."
The new liquidation process will be applicable to all the trading pairs listed on the platform.
With the recent turmoil in the global markets due to COVID-19, the crypto markets also saw a massive downturn with a significant increase in volatility. Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term recently shed around 40 percent of its gains achieved in months after the long bear in the market.