Today there are people who got liquidated due to floating profit positions being automatically closed, and there are also cases where a “lock-in” hedge became ineffective—it's all because of ADL.
🔥 Contract trivia: Even if you’re right about the direction and have floating profit, you may still be forcibly closed by the system! Many newcomers don’t know about the trap of ADL auto de-leveraging—especially if you trade small-cap coins with high leverage, you definitely need to read this through.
Many people have only heard about liquidation (margin calls) and think only losing positions get force-liquidated. ADL is actually the opposite. It’s the exchange’s last line of defense, specifically targeting positions with high leverage and high floating profit to force-reduce them.
✅ To trigger ADL, 3 conditions must be met at the same time
1. A large number of positions in the counterparty side get liquidated, and cross-margin liquidation occurs (you lose all principal and still owe the platform)
2. Differences in liquidity depth: liquidated orders don’t have enough counterparty to absorb them
3. Contract insurance fund is depleted; it can’t cover the liquidation shortfall—then ADL kicks in
📌 ADL liquidation selection formula: ADL score = unrealized profit ratio × effective leverage
One sentence: the higher the leverage and the larger the unrealized profit, the higher the priority to be selected. You can see 5 ADL indicator lights on the position page
- 0–1 green lights: low risk
- 2–3 yellow lights: medium risk—watch the market closely
- 4 orange lights: high risk—reduce leverage or take profit
- 5 red lights: highest priority—once ADL is triggered, the first batch gets liquidated
⚠️ The most dangerous part: the ADL liquidation price isn’t the current market price—it’s the bankruptcy price of the liquidated account!
Example: you short LSK with 50x. At a market price of 0.55, you have a solid unrealized profit. Once ADL triggers, it liquidates your short directly at the bankruptcy price of 0.61. After that, as price keeps dropping, you can’t capture any profits—you lose out on most of them. You were right about the direction, but your profits get slashed heavily.
💡 Practical ways to reduce ADL risk
1. Lower leverage—directly reduce the effective leverage score; the effect is most obvious
2. When unrealized profit reaches your target, actively take profit to lock it in. Once unrealized profit is cleared (ADL score resets to zero)
3. Liquidity depth is thin in niche coins—ADL risk is far higher than BTC or ETH. Try not to hold long positions with heavy leverage
4. Develop a habit: after opening a position, keep checking the ADL indicator lights on the positions
👉 Interactive question: Have any of you tried playing around with a copycat futures contract and encountered ADL reducing your position? Share your experience in the comments.
#FuturesBasics #ADLAutoDeleveraging #FuturesRiskControl #LSKUSDT