Updated 2026-07-25
Auto-deleveraging, usually shortened to ADL, is a backstop that closes profitable positions to absorb the loss when a liquidation cannot be filled above bankruptcy price and the insurance fund is not enough to cover the shortfall. If you are on the winning side of a violent move, your position can be reduced or closed even though nothing about your own margin went wrong.
Exchanges rank accounts in an ADL queue, typically by profit and leverage, so the most profitable and most leveraged positions are taken first, and many venues show your queue position as an indicator. ADL is rare and concentrated in exactly the conditions a cascade creates: gap moves, thin depth, and mass liquidations on one side. It is a structural risk of leveraged venues rather than a trading mistake, and it is worth knowing your venue's rules before you need them.