What is risk limitation?
Risk limitation are one of the risk management mechanisms to prevent huge losses. The risk limitation uses the concept of dynamic leverage.The maximum leverage that can be used when trading will change according to the value of the position held by the trader: the greater the value of the position held, the higher the proportion of initial margin required. , the lower the maximum leverage used. Therefore, the risk limitation can reduce the possibility of loss through position, thereby reducing the trigger of automatic reduction of positions.
Note: Margin requirements will increase or decrease as risk limits change.
A risk limitation is a risk management mechanism used to limit the risk of a trader's position. In a trading environment with large price fluctuations, a single trader who uses high leverage to hold a large position may bring huge losses through the position. If the insurance fund has been exhausted, the automatic de-positioning system may be triggered, which will bring additional risks to other traders. In order to prevent this from happening, BKEX sets risk limits for all trading accounts and optimizes risk management. Protect all traders from additional risks.
Futures Dynamic Risk Limitation
Each contract has a base risk limit and increment. These limition, combined with the base maintenance and initial margin requirements, are used to calculate the full margin requirement for each position.
As the position increases, so does the maintenance and initial margin requirements. Margin requirements and position leverage will increase or decrease as risk limits change.