What happens to Open Orders when a Position is liquidated?

When a position gets liquidated on Delta Exchange, all open orders for that specific contract are automatically cancelled. However, open orders and positions for other contracts remain unaffected.

Why are Open Orders Cancelled During Liquidation?

Delta Exchange uses an Isolated Margin system  meaning each position and order has dedicated margin and is managed independently from the rest of your portfolio.

To enhance capital efficiency, margin offsetting is allowed  especially when your order is meant to close an existing position. But when a position is liquidated:

• Margin offsetting no longer applies.
• The margin requirement for your open orders on that contract can suddenly increase.

To manage this situation, Delta Exchange chooses to cancel all open orders on that contract rather than:

1. Drawing extra margin from your available balance, or
2. Cancelling only a few open orders.

This approach ensures fairness and avoids taking action on behalf of the trader.

Example Scenario:

Bob has a long BTCUSD position at $8000 with 50x leverage. His liquidation price is $7882.

When the market falls to $7881, the position is liquidated.

Even though Bob has a buy order at $7880 still active in the order book, it is cancelled during liquidation  because it belongs to the same contract that was liquidated.

 Note:

Only open orders for the liquidated contract are affected. Other contracts and positions are not impacted because of the Isolated Margin system.