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    • 2.1 What Are Perpetual Futures?
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    • 2.3 Trading Fees on Electra
    • 2.4 Overview of Primary Order Types on Electra
    • 2.5 Futures Liquidation Protocols on Electra: Formula and Process
    • 2.6 How to Reduce the Risk of Liquidation on Electra
    • 2.7 Automatic Negative Balance Reset on Electra
    • 2.8 How to Adjust Leverage on Electra
    • 2.9 What Is Slippage?
    • 2.10 How to Use the Order History Feature on Electra
    • 2.11 Order Errors on Electra: Causes and Solutions
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  1. Electra Trading School

2.7 Automatic Negative Balance Reset on Electra

What Is It? The automatic negative balance reset is a feature designed to protect users from incurring debts on the Electra platform due to sudden price movements or position liquidations.

How Does It Work?

  • Negative balance scenario: A negative balance arises when a position liquidation fails to cover a user's obligations, often due to high market volatility.

  • Reset mechanism: In such cases, Electra automatically resets the negative balance, ensuring users don’t end up in debt.

  • Risk coverage: The platform uses mechanisms funded by liquidation fees and other operational charges to address these shortfalls, effectively managing risks and maintaining platform stability for all participants.

  • Electra is committed to transparency and is always available to address any questions you may have about this process.

Key Features

  1. No Debt to the Platform: Users are not liable for covering losses beyond their deposit. This ensures safety and comfort while trading.

  2. Insurance Fund Utilization: Electra maintains an insurance fund to cover negative balances. This fund is replenished through liquidation fees and other operational charges.

  3. Ecosystem Protection: Negative balance resets prevent users from accumulating debts. This contributes to platform stability and fosters trust within the community.

Benefits for Traders

  • Reduced Financial Risks: Even in highly volatile conditions, users are shielded from incurring debts.

  • Transparency: The automatic reset mechanism and the insurance fund are fully integrated into Electra's ecosystem, ensuring predictability.

  • Increased Confidence: Users can trade with greater peace of mind, knowing their risk is limited to their account balance.

Why Is This Important? The automatic negative balance reset feature is particularly crucial in highly volatile markets, where price swings can be significant. Electra ensures that even in extreme market conditions, users are not burdened with additional payments.

This mechanism makes trading on Electra safer and more appealing to both novice and experienced traders.

Previous2.6 How to Reduce the Risk of Liquidation on ElectraNext2.8 How to Adjust Leverage on Electra

Last updated 2 months ago