> For the complete documentation index, see [llms.txt](https://docs.drake.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drake.exchange/trading/risk-management.md).

# Risk Management

## Risk Controls

Drake implements multi-layered risk management.

### Margin Requirements

**Pre-Trade Checks:**

* Minimum margin ratio to open positions (\~150%)
* Sufficient collateral verification
* Position size limits

**Pre-Withdrawal Checks:**

* Minimum margin ratio after withdrawal (\~150%)
* Remaining collateral adequacy

**Ongoing Monitoring:**

* Real-time margin ratio calculation
* Liquidation threshold monitoring (\~100%)
* Automated liquidation triggers

### Open Interest Limits

**Per-Asset Caps**: Maximum open interest per instrument as percentage of vault assets.

**Imbalance Limits**: Maximum difference between long and short open interest.

Limits enforced via OIAndPnLManager on position opens and increases.

### Price Bands

Each instrument has minimum and maximum order prices (typically ±10% from current price). Orders outside bands rejected.

### Dynamic Spreads

SpreadManager adjusts AMM spreads based on:

* Market volatility
* Vault utilization
* Open interest imbalance
* Liquidity conditions

Spread ranges:

* Normal: 0.02-0.05%
* High volatility: 0.10-0.20%
* Emergency: 0.50%+


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