> For the complete documentation index, see [llms.txt](https://docs.tradoor.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tradoor.io/auto-deleveraging-adl.md).

# Auto Deleveraging (ADL)

If positions in a certain direction are instantaneously closed with large volumes, it could lead to a scenario where the net exposure exceeds that of the Liquidity Provided. In such cases, to ensure that traders' profits have a counterparty for settlement, it's necessary to forcibly reduce positions exceeding the liquidity provided, ensuring that both long and short positions on the platform have counterparties.

ADL (Auto-Deleveraging) Ranking:

* Contracts with the largest exposure value are prioritized for ADL.
* Positions opposite to the LP's exposure direction are chosen.
* Positions are ranked by leverage profit rate:
  * For profitable users: Position profit rate \* leverage ratio.
  * For losing users: Position profit rate / leverage ratio.
* ADL stops when the exposure value of all contracts is zero.
* ADL execution price = Contract price at the time of trigger. 

$$
P\_{adl}=(1+PR\_0)P\_{index}
$$

<br>


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