What Is Risk Limit Level on KuCoin Futures?

2022/12/01 08:38:00

KuCoin Futures adopts risk limit level to lower the liquidation risk and improve the user’s trading limit.

What is risk limit level?

The level is measured by four factors: limit amount, max leverage, initial margin rate, and maintenance margin rate. The level will influence your order-placing and liquidation. Take BTC PERP/USDT as an example:

1. Order-placing: The available order amount, positions, and the leverage are determined by the risk limit level. As is shown above, If the user’s risk limit level is 3, then the max leverage is 50x, and the max position is 2,000,000 USDT.

2. Liquidation: The liquidation price is based on the corresponding maintenance margin rate of the risk limit level. If the user’s risk limit level is beyond 1, part of the position will be liquidated to lower the risk limit level, and the realized PNL will be credited to the account. If the user’s risk limit level is 1, the position will be liquidated. To partially close the position, FOK (Fill or Kill) order will be adopted; if failed, the entire position will be liquidated.

If the user holds a position with the value of 2,500,000 USDT and the risk limit level is 4, when liquidation occurs, the system will reduce the position to lower the risk limit to level 3. Reduced Value = Position Value - Limit Amount of the Original Level, namely 2,500,000 USDT – 2,000,000 USDT = 500,000 USDT. The position will be closed at the value of 500,000 USDT. After reducing the position, the risk limit level alters to 3, the maintenance margin rate is updated, and the position returns to normal.

Notice:

1. Users can adjust the risk limit level by themselves. When adjusting the level, all the open orders will be cancelled, margin may be increased to prevent the liquidation. In the meantime, the liquidation price will change according to the maintenance margin rate.

2. Users can adjust the risk limit level on the bottom right corner as shown in the screenshot below.