Here is the blunt truth: if you can see the ADL indicator light up, you are standing at the edge of forced position reduction. The more lights are on, the higher your ranking, and if ADL is actually triggered, your position will be the first to be cut. But lights being on does not mean something will happen immediately. You need to understand what it is telling you.
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Step 1: Understand What ADL Actually Is
Goal: Understand the nature of the auto-deleveraging mechanism. It is the exchange's last line of risk control, not something that is triggered every day.
ADL stands for Auto-Deleveraging. When is it activated? When extreme market conditions cause a large number of liquidations, and those liquidation orders cannot be filled in the market because the losses exceed the account equity, and the insurance fund also does not have enough money to cover the shortfall. At that point, the platform no longer places liquidation orders into the market to wait for matching. Instead, it directly matches and closes positions from profitable accounts on the opposite side, in a specific order.
In plain terms: someone loses more money than they have, the insurance fund cannot cover it, so the platform forcibly closes part of the positions from the most profitable and highest-leverage traders to fill the gap. This is called "sacrificing profitable large accounts to protect the whole platform."
Completion standard: You can explain the trigger conditions for ADL: extreme market volatility, price gaps, liquidity drying up, and normal forced liquidation orders being unable to be fully absorbed.
Common mistake: Some people confuse ADL with "forced liquidation." Forced liquidation happens when your own margin is insufficient and the system closes your position. ADL happens when your margin is sufficient and you are still making money, but because other people's losses exceed their equity, you get dragged in and have your position reduced. These are two different things.
Step 2: Read Your ADL Indicator Light
Goal: Find your ADL indicator and understand what it is telling you.
How to do it on the app: Open the OKX App, tap Trade at the bottom, select Perpetual or Futures contract, and go to the positions page. In your position information section, you can see a progress bar made up of 1 to 5 small squares. That is the ADL indicator. The light is usually located near the leverage multiple and margin ratio. Different app versions may have slightly different interfaces, so look for the row with a grid-like icon.
How to do it on the web: On the web trading interface, also in the Positions area, find the ADL indicator, which shows 1 to 5 lights.
Completion standard: You can see the light bar and know how many lights are on.
How to interpret the indicator:
| Number of lights | Meaning | Your situation |
|---|---|---|
| 1-2 lights (green) | Lower risk | Normal, far from the front of the ADL queue |
| 3 lights (yellow) | Medium risk | Starting to approach the danger zone |
| 4-5 lights (red) | High risk | If ADL happens, you will be among the first to be reduced |
How the ranking is calculated: The system ranks positions based on leverage and profit rate. The higher your leverage and the more profit you have, the higher your ranking. The calculation formula is roughly: position profit rate divided by account margin rate. The more profit you have and the higher your leverage, the higher your ranking.
Risk reminder:
The light you see is a "real-time ranking," not a "trigger probability." It shows your current relative position among all users. Five lights being on does not mean there is a 50% chance of ADL being triggered. It means that if ADL happens, you will be among the first to be cut. Many people panic when the light turns red, but ADL itself is rarely triggered. When the insurance fund has enough money, the system will not go through the ADL process.
Step 3: Reduce Your Risk of Being Affected by ADL
How to do it: If you notice the light turning red, you can move yourself further back in the queue with the following actions:
Add margin to reduce the actual leverage multiple of your account.
Actively reduce part of your position to lower your position size and reduce maintenance margin requirements.
Prioritize trading mainstream coins and contracts with good depth. Contracts with poor liquidity are more likely to trigger ADL in extreme market conditions.
Use delta-neutral strategies. Fully hedged positions rank further back in the ADL queue.
Completion standard: After taking action, go back to the positions page and check the ADL indicator. The number of lights should have decreased.
How to Verify Completion
Open the Positions page and check that the ADL indicator has turned green or the number of lights has decreased. The ADL mechanism is global. You cannot "turn it off" or "cancel" it. You can only lower your priority by adjusting your own position parameters.
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FAQ
Question: How much money can I get back after being reduced by ADL?
Answer: The platform will close your position at the mark price, and the corresponding profit from the position will be settled into your account balance after the transaction. No trading fees will be charged on the reduced portion. If you want to re-enter the market after being reduced, you need to open a new position yourself.
Question: Will the platform notify me when ADL is triggered?
Answer: Yes. OKX will notify you by SMS and email that your position has been reduced and at what price. You can also check the records in Position History. The record type will show as "Auto-Deleveraging."
Question: How often does ADL trigger?
Answer: Very rarely. It is an emergency mechanism. It is only activated when the insurance fund drops significantly or when the normal forced liquidation process cannot fully absorb liquidation orders. You will almost never encounter it in normal trading, but it is necessary to know that it exists.
