Trading Info
Opening and Closing Positions
This guide explains the steps to open and close positions on Copycat DEX. To open and close positions on Copycat DEX.
To open and close positions on Copycat DEX, you need to prepare:
Web3 Wallet: Such as OKX, Metamask.
Sufficient BNB: For paying transaction GAS fees.
Adequate Margin: Ensure sufficient funds for trading.
Going Long
Long Positions: Profit if the underlying asset price rises; loss if it falls.
Steps to Open a Long Position:
Visit Copycat DEX website (dex.copycat.finance), click on "Lunch DEX" to enter the trading page, and connect your wallet.
Use the search bar to choose the trading pair you want to trade. You can bookmark it for easy access.
Set trading parameters. Market Orders and Limit Orders: Copycat DEX supports market orders and limit orders. Market orders execute immediately at the current market price. Limit orders execute at the market price when the specified price is reached. Note: the limit price for opening long positions cannot be higher than the current market price, and the limit price for closing long positions cannot be lower than the current market price.)
Approve the trade. After completing the trading parameter settings, authorize and place the order by paying GAS, and your long position will be successfully created.
Leverage: Copycat DEX supports leverage from 2x to 100x.
Take Profit and Stop Loss: You can set take profit and stop loss orders in advance. When the margin rate is ≤ 10%, the position will be liquidated. The maximum profit for a trade is 900% of the collateral, so if you don't set any take profit, it will automatically set a take profit ratio of 900%.
Closing: You can close your position by clicking the "Close" button and confirming the action in your wallet. Profits from long positions are paid in the form of your collateral type, for example, if your collateral is USDT, you will receive profits in USDT.
Going Short
Short Positions: Profit if the underlying asset price falls; loss if it rises.
Steps to Open a Short Position: Same as going long. Note: the price for opening short positions must not be lower than the current market price; for closing short positions, it must not be higher
Contract Terminology Definitions
*Margin
Margin: The funds that traders must deposit in their trading account to open a position. The purpose of the margin is to ensure that the trader can meet potential loss obligations. During the holding period on Copycat DEX, you can deposit/reduce margin to adjust your position for maximum profit.
Current Margin: Refers to the current amount of margin for an open order. Current Margin = Initial Margin + Additional Margin - Withdrawn Margin.
Opening Margin: The amount of margin entered when placing an order.
Initial Margin: Refers to the margin after deducting the transaction fee upon opening. Initial Margin = Opening Margin * (1 - Leverage * Opening Fee Rate).
*Margin Rate
The margin rate is an indicator of the risk level of an open order. A lower margin rate means closer to the liquidation line. The calculation of the margin rate considers the initial collateral, additional margin, withdrawn margin, profit/loss, closing fee, overnight interest, and funding fee.
Example: Suppose you open a position with 100 USDT as initial margin, add 50 USDT, withdraw 10 USDT, profit/loss is 5 USDT, closing fee is 2 USDT, overnight interest is 1 USDT, and funding fee is 3 USDT. Margin Rate = (100 + 50 - 10 + 5 - 2 - 1 - 3) / 100 = 1.39.
*Liquidation Trigger
Liquidation, or forced closure, aims to prevent the account balance from going negative, i.e., to prevent the investor from losing more than their initial investment. This is an important safety measure in leveraged trading but also means that the investor may lose their entire position at an unfavorable price point. Therefore, understanding and properly managing leverage and margin is key to leveraged trading.
Going Long: Liquidation Price = Opening Price - Opening Price * ((Initial Margin + Additional Margin - Withdrawn Margin) * 0.9 - Funding Fee - Overnight Interest) / (Initial Margin * Leverage)
Going Short: Liquidation Price = Opening Price + Opening Price * ((Initial Margin + Additional Margin - Withdrawn Margin) * 0.9 - Funding Fee - Overnight Interest) / (Initial Margin * Leverage)
Example: Suppose you open a long position at a price of 1000, with an initial margin of 200, additional margin of 50, no withdrawn margin, no paid funding fee or overnight interest, and using 5x leverage. Then your liquidation price would be:
Liquidation Price = 1000 - 1000 * ((200 + 50 - 0) * 0.9 - 0 - 0) / (200 * 5) = 1000 - 1000 * (250 * 0.9) / 1000 = 1000 - 225 = 775
So, if the market price falls to 775 or below, your trade will be liquidated.
Trading Fees
A. Trading Fee: 0.02% - 0.03%
The opening fee is deducted from the margin when opening a position.
To encourage a balance between long and short positions, the trading fee will automatically adapt based on the long/short position ratio. Where the platform's overall long/short positions are biased towards one side, the opening fee for that side is 0.03% and the closing fee is 0.02%. For the side with fewer overall long/short positions, the opening fee is 0.02% and the closing fee is 0.03%.
B. PNL Settlement Fee: 0.01%
A PNL settlement fee is charged when opening and closing positions, serving as a reward source for users who contribute funds to the PNL pool.
Example: The initial margin is 100 USDT, and the user chooses to short with 20x leverage. If the majority of the platform's users are shorting, the opening fee is 0.03%.
Initial Margin = 100 USDT * [1 - 20 * (0.03% + 0.01%)] = 99.2 USDT
Position Size = 99.2 * 20 = 1984 USDT
Opening Fee = 100 USDT * 20 * (0.03% + 0.01%) = 0.8 USDT
If the position is closed at this time,
Closing Fee = 99.2 * 20 * (0.02% + 0.01%) = 0.5952 USDT
The above formulas are for the original fees, without considering any fee discounts.
Fixed Spread
Fixed spreads are only applicable to market orders. When trading begins, the Chainlink oracle returns the asset's price, taking into account the spread. The fixed spread is set at 0.01%.
Dynamic Spread
The dynamic spread is an additional variable applied on top of the fixed spread, and it is not applicable to all trading pairs. For highly liquid trading pairs like BTC/USDT, dynamic spreads are typically not considered. The percentage of the dynamic spread depends on various factors, including the position size, open positions on specific trading pairs, and the direction of the trade (long or short).
For example, if you place a market order in the ETH/USDT trading pair, and the real-time price is 2000 USDT, with a fixed spread of 0.01%, and a calculated dynamic spread of 0.005% based on market conditions, your opening price would be:
Opening price = 2000 + 2000 * (0.01% + 0.005%) = 2000.3 USDT
This means that your actual trading price would be slightly higher than the price provided by the oracle, as it includes both the fixed spread and the dynamically calculated spread based on current market conditions.
Leverage
Leverage can be set within a range of 2X to 100X.
For example, if you have 1,000 USDT and you choose to use 50X leverage, your position size can be magnified to 50,000 USDT. If you would have made 1 USDT in profit with 1,000 USDT, with 50X leverage, you can potentially make 50 USDT in profit.
Please note that while leverage can amplify profits, it also increases the risk of losses, and you should manage your risk accordingly.
Slippage
Slippage refers to the maximum price deviation you are willing to accept when placing an order. If the market price fluctuates significantly before opening a position, a market order will be automatically canceled, and your margin will be refunded.
Market Order: When you confirm to open a position at the market price, the price returned by the oracle may differ significantly from the actual current price. The maximum slippage is the maximum price difference you can accept, and if the returned price exceeds the slippage range, the market order will be automatically canceled.
Limit Order: When placing a limit order by specifying a price, the default slippage is 0%.
For example, if you go long in the LINK/USDT market, and the real-time price is 30 USDT, with a fixed spread of 0.04%, and you set a slippage of 1%, the opening request will only be accepted if the returned price is ≤ [30 USDT + (30 USDT * 1% + 0.04%)] = 30.31 USDT; otherwise, the order will be canceled, and your margin will be refunded.
Overnight Interest
Overnight interest is charged per block and deducted upon order closure. Calculating overnight interest involves factors such as the number of blocks per hour, the overnight interest rate per block, and the initial margin.
For example, if you opened a position in the ETH/USDT market at block height 1000, and the current block height is 1500, with 10 blocks per hour and an overnight interest rate of 0.02%, with an initial margin of 200 USDT, the overnight interest would be calculated as follows:
Overnight Interest = (1500 - 1000) * 10 * 0.02% * 200 = 0.4 USDT.
Funding Cost
Funding costs aim to balance the positions of long and short traders by increasing the value of the position of the side with fewer positions. It automatically adjusts based on the opening and closing positions of other users and is deducted upon order closure.
Funding cost = Current position * funding rate
Example: In the BTC/USDT market, if you hold a long position of 10,000 USDT with a funding rate of 0.03%, the funding cost would be:
Funding cost = 10000 * 0.03% = 3 USDT
Note:
When the Copycat trading page displays a positive funding rate, long positions pay funding costs, and short positions receive funding costs.
When it displays a negative funding rate, long positions receive funding costs, and short positions pay funding costs.
Take Profit
Take profit is an automated preset order designed to lock in investors' profits. If the market price reaches the preset take profit price, the trading platform will automatically sell the asset to secure your profit.
Example: Suppose you are long in the LINK/USDT market with an opening price of 20 USDT and 5x leverage. If you set a take profit price of 25 USDT, the platform will automatically execute a market order to close your position when the market price reaches 25 USDT, ensuring your profit.
Stop Loss
Stop loss is an automated preset order designed to limit potential losses for investors. If the market price reaches the preset stop loss price, the trading platform will automatically sell the asset to prevent further losses.
Example: Suppose you are long in the ETH/USDT market with an opening price of 2000 USDT and 10x leverage. If you set a stop loss price of 1900 USDT, the platform will automatically execute a market order to close your position when the market price falls to 1900 USDT, preventing further losses.
Profit/Loss (PNL) and Return on Investment (ROI)
Profit/Loss (PNL) or ROI (Return on Investment) represents your unrealized profit or loss, which fluctuates with changes in the market price.
Example:
If you are in a long position with the following parameters:
Opening price: 100 USDT
Current price: 120 USDT
Initial margin: 10 USDT
Opening fee: 0.06%
Leverage: 10x PNL = (Current price - Opening price) / Opening price * Initial margin * Leverage PNL = (120 - 100) / 100 * 10 USDT * 10 = 20 USDT ROI = (Current price - Opening price) / Opening price * Leverage ROI = (120 - 100) / 100 * 10 = 200%
If you are in a short position with the following parameters:
Opening price: 100 USDT
Current price: 80 USDT
Initial margin: 10 USDT
Opening fee: 0.08%
Leverage: 10x PNL = (Opening price - Current price) / Opening price * Initial margin * Leverage PNL = (100 - 80) / 100 * 10 USDT * 10 = 20 USDT ROI = (Opening price - Current price) / Opening price * Leverage ROI = (100 - 80) / 100 * 10 = 200%
Please note that these are basic explanations, and actual trading involves various factors and complexities.
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