How to show the exchange what you felt they were responsible for and it wasn't the market it was the application causing something that led to the margin being an issue and getting liquidated

Answered at Oct 20, 2024

Understanding the Issue: Application vs. Market Dynamics

When trading on an exchange, it's crucial to distinguish between issues caused by market dynamics and those stemming from the trading application itself. If you believe that an application error led to your margin call and subsequent liquidation, you need to present a clear, factual case to the exchange.

Identifying the Problem

1. Gather Evidence:

  • Transaction Logs: Collect all transaction logs from the period in question. These logs will show the sequence of trades and any anomalies.
  • Screenshots: Take screenshots of any error messages or unusual application behavior.
  • Communication Records: Save any communication with the exchange's support team regarding the issue.

2. Analyze the Data:

  • Market Conditions: Review market conditions during the incident. Was there extreme volatility or a sudden price drop?
  • Application Behavior: Compare your experience with known application issues. Did the app freeze, crash, or display incorrect data?

Building Your Case

1. Document the Incident:

  • Timeline: Create a detailed timeline of events, including when you noticed the issue and any actions you took.
  • Impact: Clearly state how the application error affected your trades and led to a margin call.

2. Use Comparisons:

  • Peer Experiences: If possible, find other traders who experienced similar issues. This can strengthen your case by showing a pattern.
  • Historical Data: Compare your incident with past application errors acknowledged by the exchange.

Presenting Your Case

1. Contact Support:

  • Formal Complaint: Submit a formal complaint to the exchange's support team. Use clear, concise language and include all evidence.
  • Follow-Up: Keep track of your complaint's status and follow up regularly.

2. Escalate if Necessary:

  • Regulatory Bodies: If the exchange does not respond adequately, consider contacting financial regulatory bodies. They can mediate disputes and ensure fair treatment.

Example Case Study

Imagine a trader, Alex, who experienced a sudden liquidation due to an application glitch. Alex noticed that the app displayed incorrect margin levels, leading to an unexpected margin call. By gathering transaction logs, screenshots, and communication records, Alex built a strong case. He found other traders with similar issues and presented this evidence to the exchange. After a thorough review, the exchange acknowledged the error and compensated Alex for his losses.

Conclusion

By systematically gathering evidence and presenting a well-documented case, you can effectively demonstrate that an application error, not market conditions, led to your margin call and liquidation. This approach not only helps in seeking compensation but also encourages exchanges to improve their systems, benefiting all traders.