⚠️ YOU CAN BE MAKING A PROFIT ON BINANCE FUTURES AND STILL SEE YOUR POSITION CLOSED AUTOMATICALLY 🚧 DO YOU KNOW WHY? ⁉️
👀 It’s called ADL (Auto-Deleveraging), and it’s a risk every futures trader should understand.
🧠 WHAT IS ADL?
It’s the automatic deleveraging mechanism Binance Futures uses as a last resort when the insurance fund can’t cover a bankrupt position.
In that scenario, the system may automatically close profitable positions held by traders on the opposite side to manage the deficit.
🚨 WHEN IS IT TRIGGERED?
1️⃣ A position enters liquidation.
2️⃣ The insurance fund cannot take over the bankrupt position within its available capacity.
3️⃣ ADL is triggered, and the system selects opposing positions based on their priority.
📊 WHO HAS HIGHER PRIORITY?
🪙 Binance calculates the ranking based on profitability and effective leverage.
🗯️ In general, more profitable positions with higher effective leverage have a higher priority in the ADL queue.
📈 The lesson: being in profit does not mean you are protected from this mechanism.
⚡ WHAT HAPPENS IF YOU’RE AFFECTED?
▪️ Your position may be closed partially or entirely.
▪️ The closure is executed at the bankruptcy price of the corresponding liquidated position, which may differ from the market price.
▪️ Binance notifies you of the closure amount and price.
▪️ No trading fee is charged for a position closed through ADL.
🔎 HOW CAN YOU MONITOR THE RISK?
Check the ADL indicator for your positions in Binance Futures.
The higher your relative priority, the more likely your position is to be selected if the mechanism is triggered. This indicator does not guarantee that it will happen.
🛡️ THE LESSON FOR TRADERS
Avoiding the liquidation of your own position does not eliminate all the risks of trading futures.
Managing leverage, position size, and margin is essential. Reducing effective leverage can lower your relative priority, but it does not completely eliminate ADL risk.
💬 STRAIGHT QUESTION:
Did you know about ADL, or did you think a profitable position was protected from automatic closure?
🗯️ Share your experience in the comments and share this post with other Futures traders 👀
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