Crypto trading · Pro
Auto-deleveraging
Also searched as: ADL
What does Auto-deleveraging mean?
Auto-deleveraging, or ADL, is a derivatives risk mechanism that can reduce selected opposing positions when the venue's liquidation-loss process requires it. Selection follows the venue's rules.
Example
A profitable position is partially reduced during severe market stress even though its own margin is adequate.
Illustrative example; not a provider’s quoted offer.Why it matters for prop traders
A profitable trade can end earlier than planned. Understand the venue's ADL indicator and how the prop program treats forced reductions.
Sources and further reading
The following primary sources support the terminology. Provider rules describe their own products and may change.