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

# Executable risk

> Risk is measured from settled, executable venue proceeds rather than marks.

# A mark does not repay a loan.

A displayed midpoint can be useful to a trader, but it is not cash that can repay debt. Axient’s reference model values a position through the cumulative proceeds that its actual quantity could obtain on the connected venue, net of costs required before repayment.

## Entry and exit are different functions

* `Aₜ(q)` is the settled cost of acquiring `q` tokens at time `t`, including entry fees, impact, and allocated settlement costs.
* `Bₜ(x; q)` is the settled net proceeds from selling `x` tokens out of a held position `q`, after venue fees, execution costs, and any explicit execution reserve.
* The full executable liquidation value is `Vₜ(q) = Bₜ(q; q)`.

The model deliberately does not replace `Vₜ(q)` with quantity times midpoint. On a thin book, the two values can differ materially.

## Settled, not matched

An order can be submitted, acknowledged, or matched before asset and cash transfers are final. Debt-clearing accounting uses settled proceeds only. This avoids recording a reduction in debt before the venue’s settlement rules confirm that the corresponding cash is available.

## Coverage and buffers

The reference accounting separates free cash `K`, executable liquidation value `V`, debt `D`, and a forward-looking buffer `M`. It defines:

* **Executable equity:** `E = K + V − D`
* **Health factor:** `HF = (K + V) / (D + M)`

The buffer can cover maintenance margin, expected execution uncertainty, settlement latency, concentration, and operational risk. A maintenance action may seek to restore a buffer; hard-flat has a narrower objective: clear the debt before the venue closes.

## Position controls

The margin layer can apply controls as conditions change:

1. **Live** — a position can be opened, reduced, or closed while the market is active.
2. **Reduce only** — new risk is limited as the market approaches venue close.
3. **Partial liquidation** — risk may be reduced before the finality boundary to restore a safety buffer.
4. **Hard-flat** — the mechanism targets debt elimination, selling only the quantity required when that is feasible.

<Warning>
  Depth can disappear, the venue can stop trading early, or settlement can fail. Executable-risk controls are safeguards under their assumptions; they are not a guarantee that hard-flat execution will be possible.
</Warning>