what is Risk reserve funds?

Risk reserve funds are designed to protect bankrupt traders from adverse losses and ensure that profitable traders receive full profits. The main purpose of the risk reserve fund is to reduce the occurrence of forced liquidation by trading counterparties. When a forced liquidation occurs, the counterparty automatically liquidates the position of the other trader to fill the position of the bankrupt trader. In these cases, the counterparty with a profitable position using high leverage is more likely to face automatic position reduction. The risk reserve fund uses the margin fees of non-bankrupt users to fill the losses of bankrupt users (negative balance accounts) to solve the above problem.