When your hedging leg gets force closed by ADL while the other position remains open, it is like standing on a battlefield with half your armor stripped off. Market making accounts fear ADL most -- it does not evaluate your full strategy performance, only the profit and leverage of individual positions.
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Let's start with the core rule: The ADL system will almost always force close your profitable leg, while the losing position stays untouched. Once the hedging leg is gone, your original neutral strategy turns into a one-way position, and your full risk exposure is directly exposed.
Step 1: Confirm your account status first -- which leg got closed
ADL selects positions with the highest (profit × leverage) score. For market making accounts, it is usually highly leveraged profitable short positions that get prioritized for force closure.
[Action to take]: Open the positions panel, confirm the direction and size of your remaining position.
[How to do it]: Go to the Futures Trading page, enter the [Positions] section to check which leg has disappeared and which one is still held. Note down the forced closing price and the average entry price of your remaining position.
[Completion standard]: You clearly know if you are currently net long or net short, and the exact size of your risk exposure.
Step 2: Execute immediate stop loss or open a new counter position
The worst thing you can do after your hedge is broken is hesitate. Your original strategy assumption no longer holds, and holding on blindly will only lead to larger losses.
[Action to take]: Close the remaining position, or rebuild a new matching hedge.
[How to do it]:
Option A (Direct close): If the remaining position direction aligns with the market trend, you can wait for a small rebound to close it; if it goes against the trend, close it directly at market price.
Option B (Re-hedge): Open a new position of matching size in the opposite direction, either on the same platform or another exchange, to restore your neutral market exposure.
[Completion standard]: Your risk exposure returns to a controllable range, and you no longer hold an unprotected "naked" position.
Step 3: Trace the root cause -- why your hedging leg was selected
ADL does not pick positions randomly. If your position got closed, it met the criteria of "high floating profit × high leverage". During the October 2025 market crash, the ADL mechanism forced the short positions of top market makers including Wintermute to close, leaving their original hedging long positions unprotected instantly, which led to massively expanded losses.
[Action to take]: Review this ADL trigger to confirm if it was caused by your strategy flaw or extreme market conditions.
[How to do it]: Check the floating profit ratio and leverage multiplier at the time the position got closed. If you set leverage too high, lower it for future trades. If it was triggered by mass ADL events from extreme market volatility, it is not a personal mistake, but a systemic tail risk release.
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Post-operation verification checklist
After you finish the above steps, go to the [Open Orders] panel to confirm there are no leftover unfilled pending orders (ADL will automatically cancel your active orders). Find the ADL record in your order history, and tag it as "ADL" or "Auto-Deleveraging" type. When you do post-trade review, focus on the leverage level and profit of the closed position -- if leverage was over 5x with high floating profit, lower your leverage or take profit early next time, don't wait for the system to force the action.
