Liquidation Protocol
Risk and leverage are adjusted based on the user’s absolute exposure; the larger the position, the higher the required margin, and the lower the leverage. A liquidation is triggered when:
Collateral = Initial Collateral + Realized PnL + Unrealized PnL < Maintenance Margin
Liquidation occurs when the Mark Price hits the liquidation price of a position. Traders are advised to pay close attention to the movements of the Mark Price and the liquidation price to avoid being liquidated.

What happens during liquidation?

During the liquidation process, all open orders are immediately canceled. All users will be subjected to the same liquidation protocols referred to as “Smart Liquidation.” Binance avoids full liquidation of a user’s position whenever possible. For any traders that are cleared via forced liquidation and not by an order issued by the user, a liquidation fee will be charged on the amount liquidated only (not the notional value of the position).

Liquidation Orders

Please note that all liquidation orders are Immediate or Cancel orders. The order will fill as much as possible and cancel the rest. This is different from a Fill or Kill order, which will only execute if the order can be completely executed, or otherwise canceled. The system will first cancel all open orders, then attempt to reduce the user’s margin limit with one large Immediate or Cancel order without fully liquidating the user. If the user is margin compliant after calculating the realized losses and liquidation fee deductions, the liquidation will stop.If the user is still margin deficient, the user’s position will be closed at the bankruptcy price and the Insurance Fund will take over the position as the user is declared bankrupt. A portion of the remaining collateral (if any) will go to the Insurance Fund. If an account becomes bankrupt (negative wallet balance), the Insurance Fund will balance the account back to 0.

Insurance Clearance Fee

When a user's position is liquidated, a certain percentage of the Insurance Clearance fee will be collected and contributed to Insurance Fund reserves, marked as ''Insurance Clearance'' in the Transaction History.
Please refer to Binance Futures Trading Rules for more details about the insurance clear fee rate.
Trading Rules of USDⓈ-Margined Contracts | Binance Futures
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