Skip to main content

Does ADL Primarily Affect the Bid or the Ask Side of the Order Book?

Auto-Deleveraging (ADL) affects both the bid and ask sides, depending on the direction of the profitable positions being closed. If the deficit was caused by a bankrupt long position, ADL will close profitable short positions, which are on the bid side.

If the deficit was from a bankrupt short position, ADL will close profitable long positions, which are on the ask side. Therefore, it affects the side opposite to the bankrupt position's direction.

How Does a Positive Funding Rate Affect Long and Short Positions?
What Are the Criteria for a Profitable Trader to Be Selected for ADL?
Is ADL a Form of Counterparty Risk?
How Does a Negative Funding Rate Affect the Behavior of Long and Short Traders?