🏦Trading

Long / Short

Long and Short are the most fundamental and important concepts in trading. It is crucial to understand these concepts correctly to avoid difficulties in risk management.

Long

A Long position means buying an asset. When you buy an asset, you can profit if the asset's price rises, and you may incur a loss if the asset's price falls. Therefore, you might enter a Long position if you expect the price of an asset to rise, or if you have a position in another asset that is the opposite of Long, as a risk management strategy.

Short

A Short position is the opposite of a Long position and means selling an asset. Since it is the opposite of Long, you can profit if the asset's price falls, and you may incur a loss if the asset's price rises. As explained in the earlier example of a derivative - (2) ETH Staking, if you have entered a Long position by staking an asset, you might enter a Short position for proper risk management.

Max Profit

As K-BIT is in its early stage and still has much to develop, there is a maximum profit restriction for each trade. Any user of K-BIT can earn up to 500% profit on their margin or its initial position size minus the margin. This is expressed as :

Traderβ€²sProfit≀min(marginβˆ—5,Sizeβˆ’margin)Trader's Profit ≀ min(margin*5, Size-margin)

Based on Example 1 above, with a final margin of $6,951, the trader can earn a maximum profit of $34,755. Please understand that this restriction was implemented to prevent the rapid depletion of K-BIT’s liquidity.

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