Leveraged Trading
Opening a Position
Click on "Long" or "Short" on the Trade page depending on which side you would like to open a leverage position on.
Long position:
Earns a profit if the token's price goes up
Makes a loss if the token's price goes down
Short position:
Earns a profit if the token's price goes down
Makes a loss if the token's price goes up
After selecting your side, key in the amount you want to pay and the leverage you want to use.
Below the swap box you would see the "Exit Price", which is the price that is used to calculate profits if you open and then immediately close a position. The exit price will change with the price of the token you are longing or shorting.
Selecting a Market
You can select a market by changing the token that you would like to Long or Short. Two types of markets are possible with Axiodex.
Fully backed Markets
An example of a fully back market would be an ETH perp market backed by ETH-USDC where the open interest is limited to be less than the total amount of ETH and USDC tokens in the pool.
For example, if there is 1000 ETH and 1 million USDC in the pool and the max long open interest is limited to 900 ETH and the max short open interest is limited to be 900k USDC, then all profits can always be fully backed regardless of the price of ETH.
Synthetic Markets
An example of a synthetic market would be a DOGE perp market backed by ETH-USDC. While the max long open interest could be limited to a fraction of the amount of ETH tokens, it may be possible for the profits of long positions to exceed the worth of the tokens in the pool.
For example, if there is 1000 ETH and 1 million USDC in the pool and the max long DOGE open interest is limited to 300 ETH, but the price of DOGE increases 10x while the price of ETH increases only by 2x, in this case the pending profits would exceed the worth of the ETH in the pool.
To avoid this scenario, ADL (Auto-Deleveraging) may take place. When the pending profits exceed the market's configured threshold, profitable positions may be partially or fully closed. This helps to ensure that markets are always solvent and all profits at the time of closing can be fully paid.
Selecting a Pool
Multiple pools may be available for your selected market, for example, there may be an ETH-USDC and ETH-USDT pool. You can select which pool you would like to trade in depending on which collateral you prefer to be backing your positions.
Selecting Collateral
Multiple types of collateral may be available for your selected market, for example, in the ETH-USDC market, you can choose whether your position's collateral is stored as ETH or USDC.
Examples of how this could be used:
Long ETH with ETH as collateral: You would have be long ETH from your long position as well as from your ETH collateral. It is possible to e.g. open a 0.1 ETH long position for a small amount of ETH while using 1 ETH as collateral for a total of 1.1 ETH exposure.
Long ETH with USDC as collateral: You would be long ETH only from your long position. This could be useful if switching frequently between longing and shorting.
Short ETH with ETH as collateral: This could be useful for delta neutral strategies to earn funding fees. For example, if funding is such that longs pay shorts, then a 1 ETH short position could be opened with 1 ETH as collateral.
Short ETH with USDC as collateral: This could be useful if switching frequently between longing and shorting.
Note that if opening a long position with a non-stablecoin as collateral, your liquidation price may change as the price of your collateral changes.
Limit Orders
Limit orders can be created by selecting the "Limit" option after selecting whether you would like to open a long or short.
After creating a limit order, it will appear in under the "Orders" tab, you can edit the order and change the trigger price if needed.
Note that limit orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to:
The mark price which is an aggregate of exchange prices did not reach the specified price
The mark price was reached but there may not be sufficient liquidity to execute the order
The mark price was reached but executing the order would result in a position which exceeds the current max leverage
Managing Positions
After opening a trade, you would be able to view it under your Positions list, you can also click on "Edit" to deposit or withdraw collateral, this allows you to manage your leverage and liquidation price.
Closing a Position
You can close a position partially or completely by clicking on the "Close" button in the position row. Closing a position will realize pending profits / losses proportional to the percentage of the position that is closed.
For long positions, profits are paid in the asset you are longing, e.g. if you long ETH your profits will be in ETH.
For short positions, profits will be paid out in the same stablecoin that you used to open the position, e.g. USDC or USDT.
You can customize the token to be received by changing the "Receive" token in the "Close Position" menu. Note that this may perform a swap from your profit token to the token you select if needed, the swap fees will be shown in the "Close Position" menu.
The amount of profit and loss for a position, excluding changes in your collateral's value, will be proportional to your position size. For example, if you open a long ETH position of size 10,000 USD and if the price of ETH increases by 10%, the position would have a profit of 1000 USD, if the price of ETH decreases by 10%, the position would have a loss of 1000 USD.
If a short position was opened instead, then if the price of ETH decreased by 10% the position would have a profit of 1000 USD, if the price of ETH increased by 10%, the position would have a loss of 1000 USD.
Leverage for a position is displayed as (position size) / (position collateral). If you'd like to display the leverage as (position size + PnL) / (position collateral) instead, you can customise this in the "Settings" menu by clicking on the "..." icon at the top right of the page.
Stop-Loss / Take-Profit Orders
You can set stop-loss and take-profit orders by clicking on the "..." button in the position row and selecting the "Trigger Close" option.
After creating a trigger order, it will appear in your position's row as well as under the "Orders" tab, you can edit the order and change the trigger price if needed.
If you close a position manually, the associated trigger orders will remain open, you would need to cancel them manually if you do not want the order to be active when opening future positions.
Note that orders are not guaranteed to execute, this can occur in a few situations including but not exclusive to:
The mark price which is an aggregate of exchange prices did not reach the specified price
Additionally, trigger orders are market orders and are not guaranteed to execute at the trigger price.
Liquidations
If an ETH long position is opened and the position size is larger than the collateral value, then there would be a price at which the position's loss amount is very close to the collateral value.
This is referred to as the Liquidation Price and is calculated as the price at which the (collateral - losses - fees) is less than 1% of your position's size. If the token's price crosses this point then the position will be automatically closed.
Due to borrowing and funding fees your liquidation price will change over time, especially if you use a leverage that is more than 10x and have the position open for more than a few days, so it is important to monitor your liquidation price.
Collateral can be deposited using the "Edit" button in the position row, this will help to improve the liquidation price and reduce the risk of liquidation.
When a position is liquidated, any collateral remaining after deducting losses and fees would be returned to your account.
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