🌡️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.

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.

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. Using subaccounts for isolated positions can help minimize exposure and prevent full account liquidations.