Auto-Deleveraging (ADL) is a final protocol to manage the Contract Loss incurred by risk-taking traders when the Insurance Fund is used up.
(Contract Loss is a bankrupt position incurred by a trader when more than his total Initial Margin has been used in a trade.)
ADL is a rare occasion that would need profitable traders to contribute a portion of their profits to cover the losses of the losing traders.
Typically, the positions with the highest profit (and leverage) are the ones that contribute more. C-Trade makes use of an ADL indicator that tells traders where they are in the auto deleveraging queue.
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