When trading futures, you may have noticed an ADL indicator in your position details that you normally don't pay much attention to. But if one day your position is partially or fully closed without your stop-loss being triggered, you were likely hit by ADL. Let's break down this mechanism. After signing up for Binance, you can view the ADL indicator on the futures trading page. You can also check it by downloading the Binance app.
What Is ADL
ADL stands for Auto-Deleveraging. It's a forced liquidation mechanism triggered under extreme market conditions.
When a user is liquidated (blown up) and there isn't enough market liquidity to fill the liquidation order within the insurance fund's coverage, the system activates the ADL mechanism — automatically reducing positions from the most profitable or highest-leveraged counterparties to complete the fill.
In simple terms: someone gets liquidated but there isn't enough liquidity to absorb it, so the system automatically trims positions from the biggest winners.
Why ADL Exists
Under normal circumstances, a liquidated user's position is handled by the insurance fund — the fund takes over the position at market price and closes it. But during extreme market events (such as a sudden 10% price crash), the insurance fund may not be sufficient to cover all liquidation losses, and there aren't enough orders in the book to fill them.
Without ADL, these unfillable positions would become bad debt for the system. ADL maintains system balance and stability by forcibly reducing counterparty positions.
Who Gets Hit by ADL
ADL priority is ranked by the product of "profit rate × leverage multiplier." Users ranked higher are more likely to be selected for ADL.
In other words: the more you've earned and the higher your leverage, the greater your ADL risk. It's somewhat ironic — the best performers are the most likely to be force-deleveraged.
In the Binance futures position info, there's an ADL queue indicator, usually shown as 5 bars. The more bars lit up, the higher you are in the ADL queue and the greater your risk. All 5 bars lit means you're at the front of the line.
What Happens After Being ADL'd
If you're hit by ADL, part or all of your position will be forcibly closed at the current mark price. You'll receive a notification telling you how much of your position was ADL'd.
After ADL, you receive the profit corresponding to the mark price — no more, no less. While you don't lose money, you might miss out on further gains from the ongoing trend.
How to Reduce ADL Risk
First, lower your leverage. The lower your leverage, the further back you'll be in the ADL queue.
Second, take profits in time. If your unrealized profit is already substantial and your ADL ranking is high, consider proactively closing part of your position to lock in profits.
Third, monitor the ADL indicator. If all bars are lit, you're among the most likely to be ADL'd. Be especially vigilant about extreme market movements.
Fourth, trade high-liquidity pairs. Major pairs like BTC/USDT have ample liquidity, and ADL occurs far less frequently than with altcoins.
ADL vs. Liquidation
Liquidation happens because your own losses have depleted your margin. ADL happens because you've profited too much with high leverage, and you're selected by the system to help process someone else's liquidation during extreme conditions.
With liquidation, you lose money (margin consumed). With ADL, you don't lose money — your profit is just locked in and your position is forcibly reduced.
How Often Does ADL Occur
Under normal market conditions, ADL rarely happens. It typically only occurs during extreme events, such as when a token surges or crashes more than 20% in a short time. If you mainly trade BTC, ETH, and other major tokens, you'll almost never encounter ADL.
However, on altcoin futures with lower liquidity, the probability of ADL is somewhat higher.
Summary
ADL is an automatic deleveraging mechanism triggered under extreme market conditions, designed to maintain overall system balance. Users with large profits and high leverage are most likely to be selected. Lowering leverage, taking profits in time, and trading high-liquidity assets can reduce your ADL risk. While ADL won't cost you money, it will forcibly close your position, so understanding this mechanism and taking precautions is important.