A contract exchange looks simple on the surface, but the plumbing decides who survives volatility. Common mistakes: assuming marks equal last price, ignoring fees in liquidation math, and trusting a single data feed. Write down the exact definitions: mark price, index price, last price, and the event that triggers liquidation checks. Ambiguity is hidden leverage. Another mistake: chasing rebates while ignoring toxicity. When flow turns toxic, rebates do not pay your liquidation costs. Compute liquidation price including fees and funding assumptions, then compare it to your stop-loss plan. If the two are too close, your plan is mostly hope. Example: a 0.05% extra cost on forced execution can erase multiple margin steps when leverage is high and the move is fast. Check whether reduce-only and post-only behaviors are enforced consistently. Edge cases often appear during partial fills and rapid cancels. Liquidation paths differ: incremental reductions, auctions, or market orders. The difference is not cosmetic; it changes slippage and tail risk. When in doubt, reduce complexity and size, and prioritize venues that publish definitions and failure-mode behavior. Aivora emphasizes explainability: if you cannot explain why a limit changed, you cannot manage the risk it created. This is educational content about mechanics, not financial advice.
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.