πŸ“‰Trading Basics

What is margin (collateral) and leverage?

Margin is the amount sent from your wallet to open a trade, or in other words - the amount you risk. The size of a position can be many multiples of the amount posted by the trader as margin. This is called leverage.

Maximum leverage on DXS varies depending on the asset. Traders can adjust leverage before opening a trade by pressing β€˜more’ in the right part of the 'buy/sell' button.

Traders can also opt not to use leverage on DXS.

Margin trading example

Margin trading allows traders to borrow funds against collateral (margin) in their trading account in order to open larger position sizes. A typical example looks like this:

  • A trader has $1,000 deposited in their trading account

  • This trader opens a $5,000 long position on AAPL @ $160

In the above example, the trader is able to open a position 5X larger than the margin in their trading account. They have opened a position on margin using 5X leverage.

The price of AAPL moves from $160 to $170:

  • $170 / $160 - 1 = 6.25% movement in AAPL

  • 6.25% * $5,000 = $312.50 profit (31.25%)

  • Equity value = $1,312.50

The price of AAPL moves from $160 to $150:

  • $150 / $160 - 1 = -6.25% movement in AAPL

  • -6.25% * $5,000 = -$312.50 loss (-31.25%)

  • Equity value = $687.50

In both cases, the use of leverage multiplies the % movement on the underlying asset. Instead of a gain or loss of 6.25%, the trader has been exposed to 5X the underlying volatility - or 31.25%.

No leverage example on DXS

A trader's margin can be the same amount as the position to be opened. An example of this would be opening a $100 long (buy) position on Apple with 1x leverage. The trading platform holds $100 (1.77 BSV) as margin:

Leveraged example on DXS

Compare the no leverage scenario above with a trade using 10x leverage. The margin amount the trader needs to commit is only 10% of the total position size:

Does DXS use cross margin or isolated margin?

DXS uses isolated margin.

Trading platforms that use isolated margin allow traders to dedicate an amount of margin to each position separately. This approach is perfect for DXS because it does not require a trader to have funded an account. An open position can be assessed as an independent interaction with the underlying liquidity provisioning protocol.

The isolated margin mechanism allows DXS to abstract away the complexity of funding accounts and allow individual positions to be margined directly. Additionally, isolated margining makes risk management more simple and intuitive.

Can I split my position?

Yes, you can split any position into two smaller positions. Simply click on the position, click on 'Split' and define the split either in % terms or USD terms. You can also set a take profit on an existing position by clicking on the position, clicking on 'Risk' and defining your take profit in %, USD, or asset price terms:

Can I risk-manage in percent terms?

Absolutely. If you would like to specify take profit / stop loss in percent terms when opening a trade, simply go to 'Account & Settings' in the account menu and click 'Risk Manage In %':

How do I show advanced / pro trading options by default?

By default, when traversing the user flow to open a position, pro trading options like take profit / stop loss are not shown unless the 'More' button is clicked. To show pro trading options simply go to 'Account and Setting' in the account menu and click 'Toggle Pro Trading':

What happens when I take a loss?

After closing a position, any loss along with holding fees and loyalty fees is deducted from the margin paid. The remaining margin is sent directly back to your wallet.

You cannot lose more than the margin that you posted for the trade. DXS cannot deduct funds from your wallet.

What happens when I take a profit?

Your margin balance is returned immediately less holding fees and loyalty fees. Profits are paid at the end of each 8 hour trading session, at the BSV/USD exchange rate at the time of closing the trade. Please go to the 'unsettled' section, which you can find in your account tab, to see how much and when you will be paid.

How can I calculate potential profit?

When you open a position, click 'More' and look for β€˜take profit’, you’ll see potential profit there.

How is the profit and loss denominated?

Your P/L (profit and loss) is currently USD-denominated.

Please read 'Fiat Denomination of Trading Positions' for a full explanation.

How is profit % calculated?

DXS always displays return on equity (ROE). ROE is profit or loss divided by margin committed. Consider the below trade:

$250 (in BSV) was committed as margin to open a long position of $2,500 on HBAR (10x leverage). A 30% stop loss was set and was triggered at -30.6% (read this to understand how execution of trigger orders work on DXS). -30.6% * margin of $250 = -$76.50

What is a trading session?

A trading session is an 8 hour time period. At the end of each trading session, profits/losses are settled against each other. Any shortfall is covered by session liquidity.

What is a liquidation?

A liquidation is when a trading platform automatically closes a trader’s position. Liquidations are a fail-safe, developed to protect both traders and trading platforms from incurring losses beyond a specified point.

This post explains how liquidations work on DXS.

How does liquidation work on DXS?

This post explains how liquidations work on DXS.

DXS has only one rule for liquidating a position:

  • Liquidate the position if the position P/L reaches -80%

Until our implementation of Stablecoins on DXS, all positions will continue to be margined with BSV. The value of the margin posted on any open position therefore fluctuates in fiat terms. Please read this post to further understand fiat-denomination of trading positions.

DXS does not consider the fluctuating value of a trader’s margin. When it comes to liquidations, TDXP will only liquidate the position if the position P/L reaches -80%.

Unlike other platforms who make huge profits from their users' liquidations, DXS's liquidation system is just like a stop loss that triggers when a position is in 80% loss.

Our system executes liquidation orders on the very next ticker received after the ticker that exceeds 80% loss. Our system will fill the liquidation order at this price with no slippage.

Be aware that during periods of high volatility in underlying markets, prices can sometimes gap up or down. In these circumstances, your maximum loss could exceed 80% of your committed margin amount (but you will never suffer losses beyond the total amount of margin committed).

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