How Does a Trader’s Position Size Influence Their ADL Ranking?
A larger position size generally leads to a higher ADL ranking, assuming all other factors like profitability and effective leverage are equal. This is because a large, profitable position provides a greater amount of collateral to cover the bankrupt trade's deficit in an ADL event.
Exchanges prioritize deleveraging the largest positions first to resolve the shortfall most efficiently with the fewest necessary closures.
