Futures Risk Limits

When large futures trading positions are liquidated, they can cause dramatic price swings and potentially force other traders into automatic deleveraging processes. This occurs if the size of the liquidated position exceeds the market's capacity to absorb it.

To mitigate these effects, ZMO has introduced a Risk Limits mechanism. This requires traders with large positions to maintain higher initial margins and maintenance margins.

Important Reminder:

• You must manually increase your risk limit for each contract if you wish to maintain a position and open orders that exceed the limits of your current risk level.

• Higher risk limits lead to increased initial and maintenance margin requirements, which narrows the gap between your liquidation price and entry price.

Futures Risk Limit Levels (BTC Perpetual Contract Example)

When your combined position and new order size exceed your current risk limit, the system will prompt you to upgrade your risk limit level before placing new orders. Conversely, after closing a large position, you can manually lower your risk limit level to reduce the required margin thresholds.

Example:

• Current position: 5M USDT BTC perpetual position notional value with risk limit level 2

• Desired additional position value: 2M USDT

• Current Risk Limit Level: Level 2 with Max position 6M (exceeds desired 1M USDT position value)

In this scenario, you must increase your risk limit to the 12M level to place the new 2M order. After closing the 7M position, you can manually adjust your risk limit back to the lower risk limit level to revert to the original margin rates.

How to Adjust Your Futures Risk Limit

1. Click the settings icon at the top right of your trading page.

2. Click the edit button under the Risk Limit settings.

3. Click the Level you would like to use, and then click Confirm.