Position Management

Opening a Position

Opening a position is the initial and essential step a trader takes when entering the market. On Mount Exchange, trading rules are set to allow traders to hold both long and short positions on the same underlying asset, with positions in the same direction automatically consolidated.

For example, if a trader opens a 20x long position of 0.04 BTC in a BTCUSD contract and later opens a 10x long position of 0.01 BTC in the same contract, these positions will be combined. Despite differences in entry prices or leverage, the trader will end up with a single 16.66x long position, with a margin of 120 USD in the BTCUSD contract.

Position Mode

When opening a position, traders have the option to choose between isolated and cross margin modes, depending on their risk tolerance. In isolated margin mode, each position is treated independently, with the maximum potential loss limited to the margin allocated for that specific position. In cross margin mode, the risk is spread across all positions and the USD balance in the contract account, meaning the maximum loss could include the total margins of all positions plus the USD balance.

At present, Mount Exchange only supports the isolated margin mode.

Slippage

When opening a position, traders can adjust the price slippage according to their preferences. Generally, setting a higher slippage increases the likelihood of immediate order execution, though it may result in a less favorable price. On the other hand, setting a lower slippage reduces the risk of price deviation, ensuring that the execution price closely matches the trader's target, but it also increases the chance that the order may not be matched at all. The slippage effectively sets the worst possible price at which the order can be executed, known as the Accept Price. If the actual price provided by the order matching engine (the Quote Price) is worse than the Accept Price, the trade will not execute, thereby protecting the trader. The formula for calculating the Accept Price is as follows:

$$AcceptPrice<QuotePrice×(1+Slippage)foropenlongorcloseshort$$

$$AcceptPrice>QuotePrice×(1+Slippage)foropenshortorcloselong;$$

Leverage

When opening a position, traders have the option to adjust leverage $l∈{[1,125]∣Z ∗ }$ based on their risk tolerance. Higher leverage reduces the margin requirement for the position but also increases the risk of liquidation. Conversely, lower leverage decreases the likelihood of liquidation but requires a higher margin. It is generally advised that most traders exercise caution when selecting leverage levels above 20, as the associated risks are significantly higher.

Position Information

After confirming the settings, traders can proceed to open a position based on their market outlook by following these steps:

1. Specify the Position Size: Determine the desired position size $Size={n×contract size∣n∈Z ∗ }$. For example, in a BTCUSD contract, a position size of 1 BTC is acceptable, while a size of 0.001 BTC will not be processed.

2. Order Matching: Relax and wait as Mount Exchange's order matching system finds the optimal quote price for your order.

3. Review Position Details: Examine the quote and the estimated position information, which includes:

   • Margin $m$

   • Position size $s$

   • Entry price $p_e$

   • Leverage $l$

   • Liquidation price $p_l$

   • Set constant fee rate $R$

   • Set constant maintenance margin rate $MMR$

These values adhere to the following equations:

$$m×l=s×p _ e ​$$

$$p l ​ = s×p e ​ ∓m/s×(1∓MMR∓R) ​$$

Closing a Position

Closing a position is the process by which a trader exits or unwinds an existing trade. Traders close positions to lock in profits or limit losses. On Mount Exchange, if a trader has opened a long position, they close it by selling the same quantity of the asset they initially purchased. Conversely, if they opened a short position, they close it by repurchasing the same amount of the asset they initially sold. Closing a position effectively eliminates the trader's exposure to any further price fluctuations of the asset.