How to Reduce Forced Liquidation Risk

1. Monitor Margin Ratio:

To avoid forced liquidation, it's essential to monitor the margin ratio of the futures while holding positions. If the margin ratio reaches 100%, the held position will be forcibly liquidated.
The margin ratio is calculated as Maintenance Margin / Margin Balance.
Once the margin balance falls below the maintenance margin, the trading platform will force the position to be liquidated.
To hedge against price declines, the futures account must deposit sufficient margin balances. The higher the margin balance, the lower the forced liquidation price.

2. Use Stop Loss Orders to Reduce Potential Losses:

Stop-loss orders are conditional orders that are executed at a specific price after reaching a preset stop-loss point. Once the stop-loss price is reached, the system will execute the order at market/limit price.
Stop-loss orders can help investors reduce position losses in unfavorable market conditions and avoid forced liquidation.