> For the complete documentation index, see [llms.txt](https://docs.carbon.inc/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.carbon.inc/trading/liquidations-cva-and-account-health.md). # Liquidations, CVA, and Account Health ### Liquidations on Carbon A liquidation occurs when a trader’s Equity Balance falls below the Maintenance Margin (CVA) due to unrealized losses. When this happens, all open positions are forcibly closed, and the trader loses the locked margin. {% hint style="info" %} 🚨 Warning: Carbon uses a cross-margin system, meaning the entire account balance is at risk of liquidation. To better manage risk, traders can use subaccounts to isolate positions. {% endhint %} *** ### Managing Liquidation Risk #### **Estimated Liquidation Prices** Carbon provides estimated liquidation prices for open positions, but actual values fluctuate based on account balance and market conditions. Traders can view: * Pre-trade estimates in the trade details window. * Live estimates in the Positions tab.

{% hint style="info" %} ⚠️ Cross-margin accounts do not have a fixed liquidation price. Instead, traders should monitor their Remaining Equity to Liquidation to avoid being liquidated unexpectedly. {% endhint %} *** ### Key Metrics to Monitor #### **Account Health (%)** Represents the overall risk level of your account. When Account Health drops to zero, liquidation occurs. 📌 Formula: ``` (Equity Balance - Maintenance Margin) / (Allocated Balance - Maintenance Margin) ``` #### **Maintenance Margin (CVA)** The minimum collateral required to keep positions open. If Equity Balance falls below CVA, liquidation occurs. * Higher leverage = higher CVA requirement. * CVA is locked when opening a trade and is lost upon liquidation. 📌 Formula: Displayed in the Account Overview tab. #### **Equity Balance** The total account balance, including all open positions and unrealized P\&L. 📌 Formula: ``` Allocated Balance + Unrealized PNL ``` 🚨 If Equity Balance < CVA, liquidation occurs. #### **Remaining Equity to Liquidation** The amount of equity left before liquidation. When this reaches zero, the entire account is liquidated. 📌 Formula: ``` Equity Balance - Maintenance Margin (CVA) ``` #### **Available for Orders** The remaining funds available for placing new trades. 📌 Formula: ``` Equity Balance - Locked Margin - Maintenance Margin ```

*** ### Stay in Control Keeping an eye on Account Health, Maintenance Margin, and Remaining Equity to Liquidation is critical for managing risk on Carbon.
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