# Risk Parameters

## Risk Engine

The Risk Engine is an automated system that monitors your positions and the collateral supporting them. The main role of this system is to liquidate positions when the collateral in your account is not sufficient to support the loss of the position.

#### How Does the Risk Engine Work?

When you take a position on our platform, you deposit collateral as a guarantee against any potential losses. This deposited collateral must be substantial enough to sustain the position, otherwise, you risk getting liquidated.

The Risk Engine monitors this situation. If it calculates that the deposited collateral is not enough to sustain the position, it triggers a liquidation process. The threshold at which the Risk Engine will liquidate a position is if the collateral cannot support a loss of more than 10x.

#### Preventing Liquidation

To prevent your positions from being liquidated, make sure you have enough collateral deposited in your account. You should always be prepared for market volatility and have extra collateral to sustain unexpected market movements.

The goal of the Risk Engine is to protect your account from major losses. Be aware of your positions and manage your collateral efficiently to keep your trades profitable and your account healthy.

## Price Bands

In GooseFX, to protect users during volatile events and prevent market manipulation, markets will prevent orders from being filled if the oracle-mark price breaches the 10% band of the oracle's 5-minute exponentially weighted moving average price (EWMA). If the mark and the 5-minute oracle EWMA diverge by 10%, markets will pause until the price reverts back within this band.

**Formulas are defined as follows:**

`Oracle-mark divergence = (mark - oracle) * max_spread`

`Oracle-EWMA-mark band = within 10% of mark - oracle_ewma_{5 minutes}`

Further risk parameters are also set out in [Risks & Disclaimer](/risks.md).


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