◇ GLOSSARY
ADL
Auto-deleveraging. When a liquidated position cannot be closed at better than its bankruptcy price and the insurance fund cannot absorb the loss, the venue force-reduces the most profitable, most leveraged positions on the other side. You can be in profit, on the right side, and still have your position trimmed. Ranking rules are venue-specific.
ADL is what happens after normal liquidation and the insurance fund fail. A bankrupt account cannot close without leaving a hole; the venue ranks profitable counterparties and force-reduces them to plug it.
You can be short into a squeeze, up 15% on mark, and wake up partially flat because your rank score was high. Leverage and unrealized profit feed the queue on most books.
ADL is venue tail risk, not directional skill. Read the ranking rules before size. Winning the move does not guarantee keeping the full ticket in a cascade.