Risk Management & Liquidation Logic

Level2 incorporates automated guardrails to help protect capital, manage leverage risk, and handle execution costs transparently. Below is a detailed breakdown of our stop-loss logic, transaction fees, and account liquidation thresholds.

Level2 Risk Management Logic

Stop Loss (SL)

To protect your trading capital, Level2 automatically applies a default 0.5% Stop Loss (SL) to every newly opened position.

• Long Positions: The stop loss is placed precisely 0.5% below the entry price.
• Short Positions: The stop loss is placed precisely 0.5% above the entry price.

If the market moves against your position and touches or breaches the stop loss level, an automated market order is triggered to close out the position immediately and cap further downside.

Trading Fees

Transaction fees on Level2 are derived dynamically using the standardized exchange fee formula:

Where:

• N = Total number of contracts traded
• p = Individual contract execution price

Fee Illustration (Per Contract Example)

• Entry Fee: Approximately $0.12
• Exit Fee: Approximately $0.12
• Total Round-Trip Fee: Approximately $0.24

Liquidation Protocol

Liquidation acts as a terminal safety mechanism. It is triggered automatically when your total account equity drops below the required maintenance margin threshold.

When a liquidation event is forced:

1. Automated Closure: The platform instantly closes the open position via market orders.
2. Margin Return: Any remaining margin, asset balance, or collateral leftover after the close is immediately returned to your free account balance.
3. Loss Realization: Floating losses are fully locked in and realized.

For a deeper structural deep-dive into maintenance requirements and margin mechanics, please reference the Understanding Liquidation guide.

Technical Comparison: Stop Loss vs. Liquidation