This article addresses international perpetuals (derivatives) available outside of the United States. Learn more about Coinbase’s Derivatives products on the Derivatives help page.
Coinbase may automatically liquidate some or all of your perpetual futures positions if your Coinbase International Exchange (INTX) collateral is insufficient to meet margin requirements.
Important
Liquidation may result in higher fees and less-favorable pricing than self-executed trades. It can also lead to losses exceeding your margin value, potentially depleting all funds and collateral in your account. You will be responsible for any resulting deficit.
When your position moves against you, your current margin may fall below the maintenance margin level required to keep the position open. At this point, your position is liquidated to prevent a negative balance and the potential for catastrophic losses.
Trading with leverage amplifies both profits and losses which can lead to liquidation if the market rapidly turns against your position.
Margin ratio and liquidation risk
The margin ratio reflects your risk of liquidation and is calculated by dividing the maintenance margin requirement by the total funds for margin.
When trading begins or when you have no positions, the margin ratio is 0%.
A margin ratio of 100% triggers the liquidation of positions and cancellation of open orders.
You’ll receive a banner notification and an email cautioning you when you’re close to liquidation.
Status | Margin ratio | Meaning |
|---|---|---|
Low risk | 1-79% | Low risk of liquidation |
Warning | 80-89% | Risk of liquidation |
Danger | 90-99.99% | Critical risk of liquidation |
Liquidation | 100% | Liquidation has begun |
Liquidation process
Liquidation occurs in a sequence:
Open perpetual futures orders are cancelled.
Existing perpetual futures positions in your INTX account are sold in order of liquidity, most liquid assets first, based on dynamic market conditions like volatility, open interest, or volume.
Non-USDC collateral may be sold to keep your account in good standing.
Liquidation stages
Once you open your position, it can be assigned to one of the five liquidation stages.
Stage | Details |
Pre-liquidation | To prevent the position from being auto-liquidated, as it loses value as a result of adverse market moves, you must maintain a certain level of collateral in their account. Your Margin Ratio must remain below 100%. Initial Margin > Current Margin > Maintenance Margin |
Automatic Partial Liquidation | When your position loses value and the collateral in your account falls below the Maintenance Margin, but is still above the Close out Margin, the position will automatically partially liquidate the position to prevent further losses. This happens when your Margin Ratio reaches 100%. |
Liquidity Support Program | Once your Current Margin is below the Close out Margin, your liquidated positions will be assigned to LSP participants who will take on the liquidated positions. |
Insurance Fund | Positions with margin levels below Close out Margin are liquidated by the Insurance Fund when LSPs have no capacity to take liquidated positions. |
Auto-Deleveraging and Clawbacks | Residual risk is addressed by auto-deleveraging and clawbacks in this final stage of the liquidation waterfall. Auto-deleveraging and clawbacks match and auto-deleverage liquidated positions against opposing traders. |
Risk management orders
You can better mitigate risk by placing a risk management order, such as a stop limit, or take profit/stop loss (TP/SL) order. For more information, see Advanced Trade order types.
Refer to your Coinbase International Exchange agreements and disclosures for more details on perpetual futures trading risks.
Avoid liquidation
Improve your margin ratio by closing open orders, closing positions or adding margin.
Closing a position
In the Positions Blotter of any perpetual futures market page, select a position to place a market order and close the position.