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Rails employs two core risk management mechanisms: Liquidation and Proactive Order Cancellation. Both operate on top of the cross-margin model, where your entire account equity serves as shared collateral across all open positions.

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Cross-Margin Mode

All perpetual futures positions on Rails use cross-margin mode. Unrealized profits from one position can support others, but a decline in any position affects the entire account’s health. Account health is measured by the cross-margin ratio: 
crossMarginRatio = totalMaintenanceMargin / accountEquity
See Position Metrics for the component formulas.

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Liquidation

Liquidation is triggered when crossMarginRatio reaches 100% — meaning your account equity has fallen to exactly the minimum required to hold all open positions.

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Liquidation Process

When the threshold is reached:
  1. All open orders are immediately cancelled.
  2. All positions are closed simultaneously at the best available market price.
  3. Any remaining funds after covering losses are returned to your balance.

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Estimated Liquidation Price

Rails displays a per-position liquidation price estimate. See Position Metrics for the formula. In cross-margin mode this is an estimate that changes dynamically as other positions are opened or closed, index prices move, or funding payments accrue.

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How to Avoid Liquidation

  • Deposit additional funds to increase account equity.
  • Reduce position size to lower total maintenance margin.
  • Set a stop-loss to automatically close a position before it deteriorates further.

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Proactive Order Cancellation

A resting order that fills under deteriorated market conditions can push maintenance margin above account equity instantly. To prevent this, Rails cancels risky orders before they are matched.

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How It Works

The system computes a simulated cross-margin ratio assuming all qualifying open orders are executed: 
simulatedCrossMarginRatio = simulatedMaintenanceMargin / accountEquity
If this ratio reaches 90%, all orders that would increase net position exposure are cancelled. Orders that reduce position size (including reduceOnly orders) are never cancelled by this mechanism.

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Which Orders Are Included

Only orders that would increase your net position exposure contribute to simulatedMaintenanceMargin. The system exempts offsetting/closing orders oldest-first up to the current position size; any remaining quantity that would open new exposure is included.
Order TypeIncluded in simulation?
Increases position size✅ Yes
reduceOnly order❌ No
Fully offsets existing position❌ No
Partially increases net exposure✅ Excess quantity only

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Thresholds at a Glance

RatioTrigger
crossMarginRatio ≥ 100%Liquidation — all positions closed
simulatedCrossMarginRatio ≥ 90%Proactive cancellation — risk-increasing orders cancelled