Leverage

Before explaining how our Portfolio Management Software handles the leverage and margin allocation first there are some terms that need to be understood.

Position on Balance Ratio = Position Size / Wallet Balance

We use PoB instead of contracts because the managed accounts do not have the same amount of bitcoin in balance so 4000 contracts on one account could be 10% of the balance’s value and on a different account could be 200% of it’s value so instead of contracts we use the ratio between the position size and the wallet balance. This way we ensure that all gains and losses weigh the same on all the accounts.

A trade with PoB = 0.1 has the position size equal to 10% of the wallet’s balance value.

Example:
– A has 10 BTC
– B has 1 BTC
– C has 0.1 BTC

We want to open a long with PoB = 1 and 1 BTC = 4000$ (at the time of opening the position), this means that every account will have a position size equal to it’s wallet’s balance value:
– A will have 40.000 contracts
– B will have 4000 contracts
– C will have 400 contracts

One input, different position sizes but the same PoB.

Margin Allocation Percentage = Position Size / Leverage

MAP = the % of BTC from the Wallet Balance to which the selected leverage will be applied for opening a new position (in case of liquidation only the MAP, +fees if any, is lost)

For now, it can only be used with Market orders.

Before opening a position, first you must select the type of margin: CROSS or FIXED (isolated). If no selection is made, the Portfolio Management Software will use the last LEVERAGE selection made for the current instrument which can be seen in PortfolioView. Selections made for one instrument (ex: XBTUSD) will not affect the selections made for any other instrument (ex: ETHBTC).

If CROSS is selected then the position size will be adjusted with the PoB slider.

If FIXED is selected then there are 2 possibilities:

  1. Position size will be adjusted using the PoB slider and the Leverage slider while the MAP will be allocated automatically.
  2. Position size will be adjusted using the Leverage slider and the MAP slider while the PoB will be allocated automatically.