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Process of Deleveraging: When Auto-Deleveraging (ADL) activates, the system begins reducing positions of the highest-ranked traders on the opposite side of the market, meaning traders who are currently profitable relative to the liquidating position. Positions are reduced sequentially, one trader at a time, until the shortfall has been fully resolved.

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1. When ADL Triggers

ADL only activates under exceptional conditions:
  • A position has been liquidated
  • The system cannot close it at the bankruptcy price
  • The insurance fund is insufficient to absorb the remaining loss
In these rare cases, the system must redistribute risk by closing profitable positions on the opposite side.

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2. How Traders Are Ranked

Every open position receives two metrics:
  • ADL Score — based on the trader’s profitability and effective leverage
  • ADL Rank (0–5) — shown in the UI as 5 lights (0 = safest, 5 = most likely to be deleveraged)
A dedicated ranking job continuously:
  1. Computes ADL scores per instrument
  2. Sorts all positions by their score
  3. Assigns ranks, from lowest-risk to highest-risk
The traders at the top of this ranking are the first candidates for ADL.

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3. How the Deleveraging Process Works

Once ADL begins, the system processes profitable opposite-side positions in order of highest ADL score.

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Step 1 — Target Identification

  • The system selects positions in the same instrument and opposite direction
  • Positions are ordered from highest ADL score to lowest
  • The top-ranked trader becomes the first ADL target

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Step 2 — Sequential Reduction

Starting with the highest-ranked position:
  • Roxom creates a special AutoDeleverage (ADL) order
  • This order closes part — or all — of the trader’s position
  • Execution happens instantly at the current Mark Price
  • There is no slippage and no fees
  • The impacted position temporarily enters Status::ADL

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Step 3 — Position-by-Position Processing

For each trader in the queue:
  1. First Trader:
    The system closes as much of their position as needed to cover part of the shortfall.
  2. If shortfall remains:
    Move to the next trader based on ADL ranking.
  3. Continue:
    The process repeats down the list, closing portions of profitable positions until the entire deficit is eliminated.
  4. Notifications:
    Each affected trader receives an ADL execution notification.

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Step 4 — Completion

  • Once the total shortfall has been fully absorbed, ADL stops immediately
  • No further positions are touched
  • All remaining positions return to normal status