Risk & Liquidations
Risk & Liquidations
Understand how Paradex protects traders and maintains platform stability through its margin system, risk checks, and liquidation mechanisms.
Risk & Liquidations
Paradex employs a comprehensive risk management framework designed to protect both individual traders and the overall platform. The system combines real-time margin monitoring, partial liquidations, and an insurance fund to minimize losses while maintaining fair and orderly markets.
Choose between Cross Margin (shared across all positions), Isolated Margin (per-position), and Portfolio Margin (portfolio-level risk evaluation) modes to match your strategy.
Paradex uses partial liquidation to minimize impact on your assets, reducing positions incrementally rather than closing everything at once.
A backstop fund that absorbs losses from liquidated positions, protecting the broader market from socialized losses.
Detailed definitions of Account Value, Free Balance, Margin Ratio, and all key risk metrics used across the platform.
Learn about the periodic health checks, initial margin validation, and maintenance margin monitoring that keep accounts safe.
How margin requirements are calculated for cross-margin accounts, including the benefits of PnL offsetting across positions.
How portfolio margin evaluates risk at the portfolio level for reduced margin requirements. Currently in beta.
How Paradex calculates fair mark prices used for margin checks, PnL, and liquidation triggers.
Protective price boundaries that prevent orders from executing at extreme prices far from the market.
Maximum position sizes enforced per instrument to manage concentration risk across the platform.
Periodic funding payments that keep perpetual contract prices aligned with their underlying spot prices.
Understand how automatic deleveraging works as a last resort when the insurance fund is insufficient.
How losses are distributed in extreme scenarios when both liquidation and the insurance fund cannot cover deficits.
Conditions under which trades may be reversed to maintain market integrity and protect participants.