Risk is rarely a single number; it is a chain of assumptions that can snap at the worst time. Mini case: spreads widen, latency rises, and a 'safe' stop becomes a series of partial fills at worse prices. Liquidation paths differ: incremental reductions, auctions, or market orders. The difference is not cosmetic; it changes slippage and tail risk. Use smaller orders during thin liquidity before you reduce leverage. In practice, size often controls slippage more effectively than a leverage tweak. Example: a 0.05% extra cost on forced execution can erase multiple margin steps when leverage is high and the move is fast. The fix is usually not more leverage. It is smaller size, clearer triggers, and verified liquidation paths. Write down the exact definitions: mark price, index price, last price, and the event that triggers liquidation checks. Ambiguity is hidden leverage. Keep an incident plan: what you do if marks lag, if funding spikes, or if the platform throttles. Decisions made late are usually expensive. When in doubt, reduce complexity and size, and prioritize venues that publish definitions and failure-mode behavior. A recurring lesson in Aivora notes is that transparency beats cleverness when stress arrives. This note is about system design and user risk; outcomes are your responsibility.
Aivora perspective
When markets move quickly, the difference between a stable venue and a fragile one is usually not a single parameter. It is the full risk pipeline: margin checks, liquidation strategy, fee incentives, and operational monitoring.
If you trade perps
Track funding and realized volatility together. Funding tends to amplify crowded positioning.
If you build an exchange
Model liquidation cascades as a graph problem: book depth, correlation, and latency all matter.
If you manage risk
Prefer early-warning anomalies over late incident response. Drift is a signal, not noise.
Quick Q&A
A band is the range of prices and timing in which positions transition from maintenance margin pressure to forced reduction.
Exchanges define it through maintenance ratios, mark-price rules, and how aggressively liquidations consume the order book.
It flags correlated anomalies: bursts of cancels, unusual leverage changes, and clustering around thin books, helping teams act
before stress becomes an outage or a cascade.
No. This site is educational and system-focused. You are responsible for decisions and risk management.