> ## Documentation Index
> Fetch the complete documentation index at: https://docs.ultramarkets.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Management

> Understand leverage limits, position limits, and how positions close before resolution.

## Leverage Limits by Market

Not all markets support 10x leverage. We set leverage caps based on:

<CardGroup cols={3}>
  <Card title="Liquidity" icon="water">
    Can we exit a large position without excessive slippage?
  </Card>

  <Card title="Volatility" icon="chart-line">
    How violently does this market move?
  </Card>

  <Card title="Time to Close" icon="hourglass-half">
    How far away is the market close date?
  </Card>
</CardGroup>

<Info>
  Lower-liquidity or higher-volatility markets may be capped at 5x or 2x. The maximum available leverage is shown when you open a position.
</Info>

## Position Limits

To protect the vault and ensure we can execute liquidations cleanly:

| Limit Type              | Description                                  |
| :---------------------- | :------------------------------------------- |
| **Per-position limits** | Maximum position size varies by market       |
| **Per-user limits**     | Total exposure caps based on account history |
| **Per-market limits**   | Aggregate open interest caps per market      |

<Note>
  These limits scale with market liquidity. If a market's volume drops significantly, limits may tighten.
</Note>

## How Positions Close Before Resolution

Every position closes before the underlying event resolves. This happens automatically at the market's close date.

### When Auto-Close Triggers

<Steps>
  <Step title="Positions Closed">
    All open positions in that market are closed at market price
  </Step>

  <Step title="Settlement">
    Profits and losses are settled
  </Step>

  <Step title="Funds Returned">
    Funds return to your account (or the vault, if liquidated)
  </Step>
</Steps>

<Info>
  You can always close manually before auto-close. There's no penalty for early exit.
</Info>