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What Is the Impact of a Low Fund Balance on Trader Behavior?

Increased perceived ADL risk leads to reduced leverage, lower liquidity, and potential migration of traders to other exchanges.
Greeks.live05.12.25

What Is the Impact of a Low Fund Balance on Trader Behavior?

A low fund balance increases the perceived risk of Auto-Deleveraging (ADL). This typically causes traders to reduce their leverage, close profitable positions to realize gains before being ADL'd, or migrate to a different exchange with a healthier fund.

The overall effect is a decrease in market liquidity and trading volume on the affected exchange.

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Glossar

Fund Balance

Balance ⎊ The fund balance represents the total value of assets held within a specific financial pool, such as an insurance fund or a margin account, at a given point in time.

Low Fund Balance

Balance ⎊ A low fund balance, across cryptocurrency exchanges, options trading accounts, or financial derivatives platforms, represents a diminished reserve of readily available capital relative to prevailing margin requirements or anticipated operational needs.

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