> For the complete documentation index, see [llms.txt](https://yubit.gitbook.io/yubit/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://yubit.gitbook.io/yubit/tradfi/yubit-tradfi-cfd-liquidation-mechanism.md). # YUBIT TradFi (CFD) Liquidation Mechanism TradFi (CFD) uses a margin trading mechanism. When the market moves against an open position, account equity may decline as unrealized losses increase. To control account risk, YUBIT will automatically execute forced liquidation when the account margin level reaches the liquidation threshold. This article explains the margin level, liquidation trigger conditions, and liquidation execution rules for TradFi (CFD). ### 1. When will liquidation be triggered? YUBIT TradFi (CFD) determines whether liquidation should be triggered based on the account’s overall Margin Level. Formula: Margin Level = (Equity ÷ Used Margin) × 100% Where: * Equity: the real-time account value calculated based on account balance, unrealized PnL of open positions, and other factors. * Used Margin: the margin currently occupied by all open positions. * Margin Level: an important indicator used to measure the current margin risk of the account. In general, a higher margin level means the account has a stronger risk buffer. As unrealized losses increase, equity decreases and the margin level also declines. ### 2. What is the liquidation threshold for TradFi (CFD)? The liquidation margin level for YUBIT TradFi (CFD) is: **50%** When the account margin level is ≤ 50%, the system will automatically start the forced liquidation process. #### Example Assume the current account status is: * Equity: 500 USDT * Used Margin: 1,000 USDT Then: Margin Level = 500 ÷ 1,000 × 100% = 50% At this point, the account has reached the liquidation threshold and the system will start forced liquidation. Please note: TradFi (CFD) liquidation risk is mainly determined by the account’s overall margin level, rather than the profit or loss of a single position. Therefore, when an account holds multiple positions, losses from one or more positions may affect the overall account margin level. ### 3. What happens after liquidation is triggered? When the margin level reaches or falls below 50%, the system will automatically liquidate open positions in the account to release occupied margin. * If the account holds only one position, the system will liquidate that position. * If the account holds multiple positions, the system will generally prioritize positions with larger unrealized losses. After each liquidation, the system will recalculate the account margin level. If the margin level has recovered above the liquidation threshold, the liquidation process will stop. If the margin level remains at or below the threshold, the system will continue liquidating other positions. ### 4. In what order will multiple positions be liquidated? When an account holds multiple TradFi (CFD) positions, the system will generally prioritize positions with larger current losses. For example: Assume the account margin level drops to 50%. The system will first liquidate the XAUUSD position with the largest loss. After liquidation, the system recalculates the account margin level: * If Margin Level > 50% → the liquidation process stops. * If Margin Level remains ≤ 50% → the system continues to liquidate the next position with a larger loss. This process continues until the account margin level recovers above the liquidation threshold or all relevant positions have been liquidated. ### 5. How is the liquidation price determined? After liquidation is triggered, the relevant positions will be closed at the actual executable market price at that time. The final execution price may be affected by factors including: * Market liquidity * Bid-ask spread * Market volatility * Slippage * Market gaps * Price changes when the market opens or reopens Therefore, the market price displayed when liquidation is triggered is not necessarily the final executed liquidation price. In fast-moving markets or when liquidity is insufficient, the two may differ. ### 6. Why can an account approach liquidation even if the market does not move much? In addition to market price changes, some TradFi (CFD) products may generate holding costs during the holding period. For example, overnight fees from long-term holding may affect account equity. When equity declines: Equity decreases → Margin Level decreases → Liquidation risk increases Therefore, even if the market price does not change significantly, users holding positions for a longer period are advised to monitor their margin level continuously. ### 7. Can hedged positions still be liquidated? Yes. Holding positions in opposite directions does not mean the account has no liquidation risk. Hedged positions are still open positions in the account, and the account’s overall equity, margin usage, and related holding costs may still change. As long as the account’s overall margin level is ≤ 50%, forced liquidation may still be triggered. Therefore, hedging should not be viewed as a way to completely avoid liquidation risk. ### 8. Where can I view the margin level? You can view the current margin status directly on the YUBIT TradFi trading page, including: * Equity * Used Margin * Available Margin * Margin Level ### 9. How can I reduce liquidation risk? You can manage TradFi (CFD) trading risk in the following ways: #### Control position size Avoid oversized positions and keep sufficient margin buffer for market fluctuations. #### Monitor margin level Do not only focus on the PnL of a single position. You should also continuously monitor the overall account margin level. #### Set stop-loss orders properly Setting stop-loss orders according to your trading strategy may help limit the risk of expanding losses on a single position. #### Reserve available margin Keeping some available funds can provide additional risk buffer for normal market fluctuations. #### Pay attention to long-term holding costs If you plan to hold positions for a long period, please also pay attention to possible overnight fees and other related costs. ### 10. Important Risk Reminder TradFi (CFD) is a leveraged trading product. Market price fluctuations may result in partial or total loss of funds. In cases of severe market volatility, insufficient liquidity, price gaps, or market reopening, the margin level may decline rapidly, and the system may trigger forced liquidation within a short period of time. Since liquidation orders are executed at the actual executable market price, the final execution price may differ from the market price displayed when liquidation is triggered. Even if a stop-loss order is set, there is no guarantee that the order will be executed at the specified price. In fast-moving markets or when price gaps occur, actual execution may involve slippage. Before trading, please fully understand the margin and liquidation mechanism of TradFi (CFD), and use leverage, control position size, and manage account risk according to your own risk tolerance.