What Is ‘Partial Liquidation’ and How Does It Help Preserve the Spread?

Partial liquidation is a process where only a portion of a trader's leveraged position is closed to bring the margin level back above the maintenance margin requirement. By only liquidating a small part, it reduces the overall market impact compared to a full liquidation.

This preserves the spread by reducing the chance of significant slippage that could push the execution price below the bankruptcy price, thus protecting the insurance fund.