ADL (Auto-Deleveraging) is a system that on Binance automatically reduces your positions if the market is too unstable and your orders may be liquidated. If many people in the market are losing money, the ADL system helps avoid problems by reducing the positions of those traders who are taking the most risk.
Example:
Imagine that you opened a position with 10x leverage. At some point, a strong movement occurs in the market, and other traders start losing money. If there is not enough liquidity to cover the losses, Binance starts to reduce the positions of traders with high leverage (including yours) to balance the market.
How does the ADL indicator work?
On the platform, you see small “lights” that indicate how likely it is that your position will be reduced. The more lights are on, the higher the chance that your position will be reduced if problems arise in the market.
How to avoid this?
1. Use a smaller leverage. The smaller the leverage, the lower the chance of being subjected to ADL.
2. Monitor the market. If assets are too volatile, it is better to reduce risk.
3. Set Stop Loss. This will help close the position before it is liquidated.
In general, ADL is protection against extreme fluctuations in the market, but to avoid losses, it is better to manage your risks.
