Huobi’s Derivative Trading Platform Adds Partial Liquidation Feature To Limit Losses

Huobi DM, the derivatives trading platform from Huobi, has made the announcement of a new partial liquidation aimed at limiting trading loses.

Highly leveraged positions can be immediately liquidated by sudden swings in the market and cause the users to extensively lose, as it was seen during the Bitcoin’s (BTC) price crash from last week. The new liquidation mechanism from Huobi DM is going to take action whenever the markets are turbulent so that traders aren’t impacted, said Huobi in a statement.

Swings in the Market Cause Problems

As a result of the recent effects of the coronavirus, also of the crypto and stocks uncertainties in the market, the prices of assets went through some abrupt changes. Between March 12 and March 13, BTC’s value dropped more than 50% and bounced off the bottom. The crash caused half a billion dollars of liquidations at BitMEX in only 1 hour, not to mention the BitMEX system was offline and had users saying the liquidations were unnecessary.

The denial-of-service (DDoS) was to blame. During the same crash, Huobi had liquidations of about $27.45 million. After a swing in the stark price, liquidations take place as soon as holders no longer hold enough capital with the exchange they’re using for trading, which results in a closure in the trading position.

Huobi DM’s Approach

With the new adjustments, Huobi DM intends to make the all-or-nothing mechanism of liquidation better. This new mechanism offers partial liquidation, reducing the users’ positions gradually instead of performing a full liquidation with 1 event. Here’s how Huobi DM explained its approach:

“With the new mechanism, the system will automatically start liquidating a user's positions in stages—at predetermined margin ratios determined by the user's calculated exposure—until the margin ratio reaches above zero. The liquidation process also includes a circuit breaker function that halts liquidation when large or unusual deviations between the liquidation price and market price are detected.”

The new feature will apply to all the derivatives exchange’s leverages and assets, decreasing the maintenance margin ratio and updating the system’s firmware. No further comment has been made yet by Huobi, but it’s expected for some additional news to be released soon on the matter.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Oana Ularu
Oana Ularu
Curious about what’s going on with all the money in the world, Oana is bringing you the latest news in the crypto world. She’s aware of the fact that you need to know everything that’s happening on the financial scene in order to play the cryptocurrency market, so you can count on her to share with you every little detail on what matters.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


Please enter your comment!
Please enter your name here


Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Bitfinex Offers $400M Reward For Info on 120k BTC Stolen in 2016; Hackers Can Collect Too

On August 2, 2016, Bitfinex experienced one of the biggest crypto heists of all time, as hackers exploited the system, running off with approximately...

Crypto Trading Platform, 2gether, Unable To Refund $1.4M Hack; Offers Its Native Tokens

Spanish cryptocurrency trading app, 2gether announced on Sunday the platform faced a hack on July 31 on its investment coffers losing €1.183 million ($1.4...

Venture Fund to Invest Majority of $100 Million Raised Fund in DeFi Protocols

San Francisco-based venture fund Electric Capital has raised $100 million from university endowments and other non-profits and it will be using this to invest...

Filecoin to Begins its Incentivized Testnet This Week Ahead of Project Launch Next Month

Crypto project Filecoin which proposes to create a peer-to-peer storage system, will begin its incentivized testnet this week. This testnet will allow users to...

Ethereum 2.0 Final Testnet, Medalla, Rolls Out; Is A 2020 Launch Now In Sight?

The Ethereum 2.0 Phase 0 Medalla public testnet finally went live on August 4, 2020 at around 1AM GMT giving hope of a possible...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today