Perpetual Trading
Leveraged Trading
In Sypher Finance, users can take leveraged positions on various assets by executing either a Long or Short position, allowing them to trade on margin with higher capital efficiency. Leveraged positions amplify both potential profits and risks, making it crucial for traders to manage their leverage effectively.
Long Position
A trader opens a long position when they believe the asset's price will increase in the future compared to its current price.
Profit: If the price of the asset rises above the entry price, the trader earns a profit.
Loss: If the price falls below the entry price, the trader incurs a loss.
Short Position
A trader opens a short position when they speculate that the asset's price will decrease in the future.
Profit: If the asset’s price drops below the entry price, the trader earns a profit.
Loss: If the price rises above the entry price, the trader incurs a loss.
How to Open a Leveraged Position on Sypher Finance
Connect Your Wallet: Begin by connecting your compatible wallet (e.g., Metamask, OKX) to Sypher Finance.
Navigate to the Leveraged Trading Page: Access the leveraged trading interface within the platform.
Choose ‘Long’ or ‘Short’: Select whether you want to open a Long (speculate on price increase) or Short (speculate on price decrease) position, depending on your market outlook.
Select the Market: Pick the asset market you wish to trade in, such as BTC or another available asset.
Select Collateral: Choose the token you want to pay with. If the token is different from the collateral required, a swap fee will be applied.
Enter Amount and Leverage: Specify the amount you want to trade and the leverage you wish to apply. For example, if you want to go long with 0.05 BTC (~$3,436.9) and apply 10x leverage, your total position size will be approximately $34,369.00.
Review Output Variables:
Entry Price: The price at which your position will be opened.
Liquidation Price: The price at which your entire position will be liquidated if the market moves against you.
Borrow Fee: The hourly fee paid to liquidity providers (SLP) for borrowing assets, which may vary based on utilization.
Approve the Collateral: Click ‘Approve [Asset]’ to allow the platform to use your collateral for the trade.
Sign the Transaction: Confirm the transaction in your wallet.
Execute the Trade: Once approved, click ‘Buy [Asset]’ to finalize the leveraged position.
Confirm and Open the Trade: After confirming the transaction in your wallet, the trade will be processed. You’ll see a ‘Successful’ pop-up once the trade is live on the Sypher Finance interface.
Managing Positions
Once a leveraged trade is opened, it appears in a list under your Positions tab on Sypher Finance. The platform provides various tools to manage your open positions:
Available Actions:
Deposit: Add more collateral to your position. This reduces the overall leverage and helps lower the risk of liquidation by increasing your margin.
Withdraw: Remove some of the existing collateral from your position. This action increases your leverage, allowing for greater potential profits but also heightening the risk of liquidation.
Close: Close part or all of your position. You can lock in profits or limit losses by partially or fully exiting your trade.
Profit and Loss Calculation
The profit or loss (P&L) on a leveraged position is proportional to both the amount of collateral you’ve used and the total size of the position.
For example:
If you’ve used $1,000.00 of collateral to open a position of $10,000.00 in BTC (10x leverage), a 10% increase in the price of BTC from your Entry Price would result in a profit of $1,000.00.
Conversely, if BTC’s price decreases by 10%, you would incur a loss of $1,000.00.
For Short Positions, the opposite holds true:
If you short BTC and its price decreases by 10%, the position would earn a profit of $1,000.00.
However, if BTC’s price increases by 10%, you would experience a loss of $1,000.00.
Managing your position effectively by monitoring price changes, collateral, and leverage is key to maximizing returns while mitigating risks.
Deposit
When you open a new position or add additional collateral, a snapshot of the USD value of the collateral is taken at that moment. For example, if you deposit 0.05 BTC, valued at $3,500 at the time, your collateral is locked in at $3,500, regardless of future changes in the price of BTC.
How to Deposit Additional Collateral
You can deposit additional collateral to any open position by selecting the ‘Deposit’ option from your Positions list.
Impact of Additional Collateral
Adding more collateral to an open position helps reduce the leverage and lower the liquidation price, providing more security to the position and reducing the risk of liquidation. For instance, adding ~25% extra collateral can significantly improve the risk profile of your trade by lowering the liquidation threshold.
Posting collateral lowers the risk of having your position liquidated.
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