Explanation of CFD Forced Liquidation Mechanism

Dear Users,

In BingX CFD trading, forced liquidation (Stop Out) is a risk control mechanism that protects both traders and the platform from excessive losses.When your account's net asset value (NAV) is insufficient to maintain open positions, the system automatically triggers forced liquidation.This article explains how the margin ratio is calculated, the trigger conditions and execution order for Margin Call and forced liquidation (Stop Out), and practical tips to help you avoid liquidation.This explanation applies to all product types supported by BingX CFD, and covers both zero fee mode and ultra-low spread mode.

1) Margin Ratio (Margin Level) calculation formula

The margin ratio is the core indicator for measuring account risk. It reflects the relationship between your account's net asset value (NAV) and used margin.

1. Calculation formula

Margin ratio = Equity ÷ Used Margin × 100%

Of which,

Equity = Account balance + Floating PnL + Swap fee
Used Margin = Total margin occupied by all open positions
Balance = The actual fund balance in your account (shown in USDx), including realized PnL
Floating P/L = Unrealized PnL for all open positions, calculated at the current price
Swap = The funding cost generated by holding a position overnight, settled daily and factored into equity

* Unfilled trigger price orders (Pending Order) do not occupy margin.Used margin is only occupied once an order is filled and a position is formed.

2. Calculation example

Assume your CFD account is in the following state:

Account balance: 10,000 USDx
Floating PnL: −2,500 USDx
Swap: −500 USDx
Equity: 10,000 + (−2,500) + (−500) = 7,000 USDx
Used Margin: 5,000 USDx

Margin ratio = 7,000 ÷ 5,000 × 100% = 140%

At this point, the account's margin ratio is 140%, which is within a safe range.

3. Margin ratio and account status comparison

> 100% — Relatively safe: normal trading, can open new positions
= 100% — Warning: triggers Margin Call, sends a warning notification
50%–100% — Needs attention: trading is still allowed, but adding funds is recommended
≤ 50% — Forced liquidation: triggers Stop Out, the system automatically executes forced liquidation

2) Margin Call trigger conditions

A Margin Call is a warning notification the system sends when account risk increases, reminding you to add funds or adjust your positions promptly to avoid triggering forced liquidation.

1. Trigger condition

When your account's margin ratio drops to 100% or below, the system triggers a Margin Call warning.

Trigger condition: margin ratio ≤ 100%

2. What happens after it's triggered?

Notification method: The system sends you a warning through a push notification
Trading restrictions: Opening new positions is not restricted during a Margin Call, but available margin is already extremely limited
Automatic action: The system does not automatically close positions at this stage. It only sends a warning notification
Lift condition: The warning is automatically lifted once the margin ratio rises back above 100%

3. Recommended actions after receiving a Margin Call

Add margin: transfer more funds into your CFD account to increase equity
Reduce positions proactively: close some loss positions to reduce used margin
Adjust leverage: lower the leverage multiplier (if supported by the product) to reduce margin usage

3) Explanation of forced liquidation (Stop Out) trigger ratio

Forced liquidation (Stop Out) is an automatic position-closing action the system performs to protect your account from further losses when account risk reaches an extreme level.

1. Trigger condition

When your account's margin ratio drops to 50% or below, the system automatically triggers forced liquidation.

Trigger condition: margin ratio ≤ 50%

2. Forced liquidation rules under the two trading modes

BingX CFD offers two trading modes, zero fee mode and ultra-low spread mode. The forced liquidation trigger ratio stays the same in both modes:

Zero fee mode: Margin Call ≤ 100% / Stop Out ≤ 50% (charged through wider spreads, with no extra fees)
Ultra-low spread mode: Margin Call ≤ 100% / Stop Out ≤ 50% (charged through narrower spreads plus a fee)

3. Example of Triggering Forced Liquidation

Account balance: 10,000 USDx
Floating PnL: −7,000 USDx
Swap: −500 USDx
Equity: 10,000 + (−7,000) + (−500) = 2,500 USDx
Used Margin: 5,000 USDx
Margin ratio: 2,500 ÷ 5,000 × 100% = 50%

At this point, the account's margin ratio has dropped to 50%, so the system will automatically start the forced liquidation process.

4. Important Note

Forced liquidation is determined and executed based on the margin ratio
During periods of sharp market volatility, reopening, or price gaps, the margin ratio may drop below 50% quickly, causing the actual close price to be worse than the trigger price
Forced liquidation is executed automatically by the system and cannot be canceled

4) Forced liquidation execution order (positions with the largest loss are closed first)

When an account triggers forced liquidation, the system closes positions in a specific order, not all at once.

1. Execution principle: largest loss first

The system closes positions step by step, following this logic:

Step 1: Sort all open positions by floating loss amount, from largest to smallest
Step 2: Force close the position with the largest loss
Step 3: Recalculate the account's margin ratio
Step 4: If the margin ratio has risen back to 50% or above → stop forced liquidation
Step 5: If the margin ratio is still insufficient → repeat Steps 2–4, closing the position with the next largest loss

2. Example: forced liquidation process with multiple positions

Suppose you hold the following 3 positions, and your account's margin ratio has dropped to 50% or below:

Position A: Long gold (XAUUSD), floating PnL −3,200 USDx → ① closed first
Position B: Short EUR/USD (EURUSD), floating PnL −1,800 USDx → ② closed next if still insufficient
Position C: Long Nasdaq index (NAS100), floating PnL +500 USDx → ③ profitable position handled last

Execution process:

The system first force-closes Position A, the position with the largest loss (loss −3,200 USDx)
After the forced liquidation, the margin ratio is recalculated → if it has risen back to 50% or above, forced liquidation stops
If still insufficient, the system continues by force-closing Position B (loss −1,800 USDx)
This continues until the margin ratio returns to a safe level

Please Note

Profitable positions are not closed first, but if the margin ratio still doesn't meet the requirement after all loss positions are closed, profitable positions may also be closed
If there are multiple positions for the same product, they are still ranked by each position's floating loss amount
The filled price for forced liquidation depends on market liquidity and may involve slippage

5) Practical Tips to Avoid Liquidation

Here are some practical tips to effectively manage account risk and lower the likelihood of forced liquidation:

1. Keep sufficient margin

Keep a buffer of funds: We recommend keeping your account's available margin at least 2 times your used margin
Transfer additional funds promptly: After receiving a Margin Call warning, transfer funds from other accounts right away
Avoid using your full balance: Do not use all the funds in your account as margin to open positions

2. Use trigger prices to manage risk

Set a reasonable trigger price for each trade (positions close at market price once triggered) to control the maximum loss per trade
When setting a trigger price, consider the normal volatility range of the market to avoid setting it too close, which can cause frequent triggering
Note: In the event of a market price gap, the trigger price may not be filled at the expected price

3. Diversify your positions

Avoid concentrating all your funds in a single product or direction
Diversify positions across product types (for example, holding both metals and forex positions at the same time) to reduce correlation risk

4. Watch for market events

Market volatility usually increases before and after major economic data releases (such as non-farm payrolls, CPI, or interest rate decisions)
Price gaps may occur when the market reopens after a closure
We recommend reducing your position or adding margin appropriately before high-volatility events.

5. Monitor Your Account Regularly

Keep track of changes in your account's margin ratio at all times.
Set a personal alert threshold (for example, take action when the margin ratio falls below 150%).
Use the BingX App's push notification feature to stay on top of your account's risk status.

6) Negative Balance Protection Policy Explained

BingX offers a Negative Balance Protection policy for CFD users, ensuring your account will not incur liabilities beyond your account funds during extreme market conditions.

1. What Is Negative Balance Protection?

Negative Balance Protection means your maximum loss on a CFD account is limited to the full amount of funds in that account. Your account will not go negative due to extreme market volatility, meaning you will not owe the platform any additional funds.

2. Key Policy Points

Maximum loss cap: The full amount of funds in your CFD account
Negative balance reset: If your account balance goes negative due to extreme market conditions, the system will automatically reset it to zero
Scope: Applies only to CFD Accounts (does not affect other accounts such as your Spot Account or Futures Account)
How to apply: Takes effect automatically, no application needed

3. Trigger Scenarios

In the following extreme market conditions, the actual filled price of a forced liquidation may be significantly worse than the trigger price, which can cause your account to show a theoretical negative balance:

Market gaps at open (for example, Monday's open after a major weekend event)
Major breaking news causing sudden, sharp price swings
Forced liquidation of large positions during periods of extremely low liquidity

In the scenarios above, Negative Balance Protection will automatically take effect, and your account balance will not fall below zero.

4. Notes

Negative Balance Protection applies only to CFD Accounts and does not affect other accounts (such as your Spot Account or Futures Account)
The negative balance reset is usually completed automatically shortly after being triggered
This policy does not encourage taking on excessive risk. Always follow sound risk management principles

7) FAQ

Q1: At what margin ratio will forced liquidation occur?

A: Forced liquidation is triggered when your account's margin ratio drops to 50% or below.We recommend taking action (adding funds or reducing your position) before your margin ratio drops to 100%, to avoid further deterioration.

Q2: Do the zero fee mode and ultra-low spread mode have different forced liquidation rules?

A: Both modes trigger forced liquidation at the same margin ratio, which is 50% or below.The only difference is in the trading cost structure (the zero fee mode charges through a wider spread, while the ultra-low spread mode charges through a narrower spread plus a fee). This does not affect the liquidation mechanism.

Q3: Will forced liquidation close all of my positions?

A: Not necessarily.The system follows a "maximum loss first" principle and gradually closes positions until your account's margin ratio recovers to above 50%.If closing a single position is enough to restore a safe level, your remaining positions will stay open.

Q4: Can I cancel a forced liquidation that's about to happen?

A: No. Once your margin ratio meets the forced liquidation trigger condition, the system will execute forced liquidation automatically, and it cannot be canceled.We recommend taking action as soon as you receive a Margin Call alert and making adjustments before forced liquidation is triggered.

Q5: If a market gap causes actual losses to exceed my account balance, do I need to cover the difference?

A: No. BingX provides Negative Balance Protection for all CFD users, so your maximum loss is capped at the full amount of funds in your account.Even if extreme market conditions cause your account balance to go negative, the system will automatically reset it to zero.

Q6: Does the trigger price guarantee I won't be liquidated?

A: The trigger price can effectively control the loss on a single trade and reduce the risk of liquidation, but it cannot fully guarantee that liquidation will be avoided.During market gaps or sharp volatility, the trigger price may not be filled at the expected price (in other words, slippage may occur), and actual losses may exceed expectations.We recommend using it together with sufficient margin.

Q7: How is the filled price for forced liquidation determined?

A: Forced liquidation is executed at market price, meaning the best price in the order book at the time of triggering (long positions are closed at Bid 1, short positions are closed at Ask 1).Slippage may occur during periods of insufficient liquidity or sharp market volatility.

Q8: Does an unfilled trigger price order occupy margin?

A: No.BingX CFD uses a cross margin mechanism, so unfilled trigger price orders (pending orders) do not use available margin.Only after an order is triggered and filled to form an actual position will it occupy used margin and affect the margin ratio.

Terms & Conditions

The forced liquidation mechanism described in this article applies to all BingX CFD product types (metals, stock indices, forex, and commodities), covering both zero fee mode and ultra-low spread mode.
The forced liquidation margin ratio is used as the basis for determination.Under leveraged trading, unfavorable market movements may quickly deplete your margin balance.We recommend managing your position size wisely and regularly checking your account's margin status to avoid forced liquidation caused by insufficient margin.
Negative balance protection applies to all BingX CFD accounts. The system automatically resets negative balances, and users do not need to apply separately.
BingX reserves the right to final interpretation of this announcement, including any rule modifications, updates to terms, or cancellations.
Multilingual translations of the product page rules may differ. If there is any discrepancy, the English original prevails.
Any updates to the information above will be announced separately. If you still have questions about CFD, contact our customer support at any time. Thank you for your understanding and support.

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Cryptocurrencies are highly volatile and may involve various risks, including market risk, project risk, technical risk, and compliance risk. You may incur investment losses. Note the risks and invest cautiously. BingX will continue improving its trading experience and product services. Thank you for your support and understanding.

BingX Operation Team

2026-08-05

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