Some Bitcoin derivatives exchanges profit massively from position liquidations but traders can avoid this by actively managing stop-losses.
Most traders fail to understand how Bitcoin (BTC) derivatives exchanges handle their risk. There is a consensus that the winners get paid by the losing parties, but it is not as simple as it seems.
Insurance funds were initially designed to protect clients positions during excessive volatile periods. Nonetheless, some exchanges such as BitMEX display a relatively steady insurance fund hoarding despite significant hourly price swings of 10% or higher.
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https://cointelegraph.com/news/3-things-to-know-about-btc-futures-and-crypto-exchange-liquidation-engines