Margin Trades are considered to be the quickest way to make money but the risk associated with them are huge. The volatility of crypto markets is so high that no open position on either side is safe for long. To mitigate the risk of open positions to protect the capital and earned profits on traders CoinDCX has introduced the partial exit feature.
Margin Trading- Where quick and dynamic wins the race
Margin Trading is a strategy that allows traders to trade more tokens than they actually have in their wallets. This allows them to earn a huge profit if executed correctly. In basic terms margin is like a loan from the trader’s broker or exchange. This leverage usually toggles between 1x to 4x depending on the asset, its risks, its liquidity, and its volatility.
While Margin Trading does open a lot of doors it comes with associated risk. There are risks associated to price movements, other risk which are transactional in nature or due to the nature of the product or the speed of the transaction.
Say for example if a trader opens a long position with 1000 XRP at a price USD 0.40 expecting the price to go up. The possible scenarios he encounters could be that the price moves upward to USD 0.45 according to his expectation where he makes a profit or it falls, say to USD 0.35, where he makes a loss.
Considering the price inching up to USD 0.45 scenario, the trader has an option to close his position and earn the complete profit or stay invested expecting the price to rise further. Following the normal rules of margin trading, the user makes profit only if he closes his position- which means he loses the chance of further gains if the prices inches higher or stands a chance to lose out on his notional profit if the price moves downwards.
For a trader, he could suffer a loss or earn less profit as exchanges, today, allow traders to only close the position in full.
Partial Exit here turns out to be a savior.
CoinDCX Partial Exit- How to execute
CoinDCX has released the “Partial Exit” feature which gives the margin traders the powers to protect his profit by partially exiting his position while he continues to stay invested if he still feels his position has potential to earn more profits for him
Eg. If a trader, trading in the XRP/BTC pair, longs 1000 XRP at 4x leverage with an entry price of 0.00008000. The user may also specify 2 target orders of this position: 500 XRP at 0.00008100 and other 500 XRP at 0.00008200
To execute a partial order:
1. For a given position, the trader has to click on 'Add Targets'.
2. If this is the first target order for a given position, it would directly open a form where the trader can add a target order of market or limit type for closing position.
3. If this position already has some target orders, it would be listed there, which can be canceled or edited (depending on the order type and order status).
4. He will have to then specify a quantity and price (not needed for market order type) and click submit to place the request.
5. After the request goes through successfully, the list should refresh showing all his updated target orders.
CoinDCX strives to make state-of-the-art features of international crypto exchanges accessible to the Indian market.