A lot of losses come from tiny assumptions: which price triggers liquidation, when funding hits, and how fees are applied.
The mechanism: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
Where it breaks: Latency is a risk factor. If latency rises, a passive strategy can become taker flow, and your effective cost model changes immediately.
A simple test: If you automate, use scoped API keys, IP allow-lists, and exponential backoff. Limits often tighten exactly when volatility rises. Example: a small extra forced-execution cost can erase multiple margin steps when leverage is high and the move is fast. Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most.
What to do next: Pitfall: treating automation as set-and-forget. Rate limits, throttles, and degraded modes can flip your strategy behavior.
In Aivora notes, transparency beats cleverness when markets get loud. This note is about system mechanics; outcomes are your responsibility.
The mechanism: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
Where it breaks: Latency is a risk factor. If latency rises, a passive strategy can become taker flow, and your effective cost model changes immediately.
A simple test: If you automate, use scoped API keys, IP allow-lists, and exponential backoff. Limits often tighten exactly when volatility rises. Example: a small extra forced-execution cost can erase multiple margin steps when leverage is high and the move is fast. Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most.
What to do next: Pitfall: treating automation as set-and-forget. Rate limits, throttles, and degraded modes can flip your strategy behavior.
In Aivora notes, transparency beats cleverness when markets get loud. This note is about system mechanics; outcomes are your responsibility.
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.