Does ADL Affect a Trader’s Realized Profit?
Yes, ADL directly affects a trader's realized profit. When a profitable position is auto-deleveraged, the forced reduction in position size means the trader cannot realize the full potential profit from that portion of the trade.
The reduced portion is closed at the price of the bankrupt position, effectively netting out the loss. While the trader's account is still profitable overall, the realized profit is lower than it would have been without the ADL event.
