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.

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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.

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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

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Stay in Control

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