Yes, but timing matters. When your account margin ratio drops to a certain threshold, the system will first cancel orders to prevent the situation from worsening. Only if that fails will liquidation begin.
1. Trigger Threshold: The System Steps In
When your account risk ratio falls below a certain level, Binance will issue a warning and first activate “reduce-only” mode. This threshold typically ranges between 1.1 and 1.3.
Once in reduce-only mode:
- You will not be able to manually place new limit or market orders.
- You also cannot perform operations such as transferring funds.
2. Key Point: Orders Are Canceled Before Liquidation
When the market continues to move against you and the account risk ratio drops to 1.05 (105%), the liquidation process officially begins.
Before actual liquidation occurs, the first thing the system does is: cancel all your current open orders.
This is to:
- Prevent unrealized losses from expanding if orders are filled amid extreme market volatility.
- Release the locked margin, increase the account’s maintenance margin ratio (MMR), and attempt to push the risk ratio back above the safe level.
3. Liquidation Occurs: Sequence and Execution
If, after canceling orders, the risk ratio still falls below 1.05, the liquidation engine formally takes over your account.
At this point:
- Account Locked: You cannot perform any manual trades until liquidation is complete.
- Liquidation Sequence: The system will prioritize selling assets with higher liquidity to minimize market impact and your costs.
- Order Type: Liquidation orders are placed as IOC (Immediate or Cancel) orders, filling as much as possible.
- Emergency Measures: If you have enabled the auto-add margin function, the system will attempt to transfer funds from your spot wallet, but this may not be fast enough in extreme conditions.
Precondition: You are holding a Binance margin or futures position, and the margin ratio has fallen to around 1.1.
Common Failure Reasons: Some users fail to receive the liquidation notice or try to manually reduce their position only minutes before the threshold is reached, resulting in liquidation before they can react. It is recommended to set your custom margin call ratio (MCR) higher to give yourself more time to respond.
Risk Warning: Once liquidation is triggered, actual losses are inevitable. Liquidated position orders incur an additional liquidation fee. If the account balance remains negative after liquidation (auto-deleveraging), a negative balance will occur and affect future account functions.
After making the above assessments, how can you confirm you are out of danger?
Go to the Futures or Margin page and check your “Margin Ratio” or “uniMMR”. If the value is above 1.05, the liquidation risk is temporarily lifted; but if it remains below 1.1, it is advisable to add margin or actively reduce your position. Also, check your “Open Orders” list — if orders have been canceled, it means the system has already intervened.
