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🌡️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.

🚨 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.

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.

⚠️ Cross-margin accounts do not have a fixed liquidation price. Instead, traders should monitor their Remaining Equity to Liquidation to avoid being liquidated unexpectedly.

Key Metrics to Monitor

Account Health (%)

Represents the overall risk level of your account. When Account Health drops to zero, liquidation occurs.

📌 Formula:

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:

🚨 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:

Available for Orders

The remaining funds available for placing new trades.

📌 Formula:

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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