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Question for high IQ math people: > I go long. > I set TP for 1%, at which point I want to fully hedge the position. Do I set a limit sell order for 201% of the position to achieve this? If not, what's correct?

b.biddles

@thalamu_

Jun 24, 2020

"Do I set a limit sell order for 201% of the position to achieve this? " To be more clear, this should say: "...201% of the position *size* (i.e. if longing 100 contracts, then sell order is for 201 contracts)"

Replying to

Depends on what "size" means. On FTX, "size" means "number of the thing you're trading". On inverted orderbooks, "size" generally means "number of the currency you're using"--often USD. And what do you mean by "fully hedge"? Do you want to end with pure USD or BTC?

Replying to

and

Oh wow, thank you for chiming in! I am looking to be 100% in synthetic USD after completing a trade. Does that clarify?

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and

Sorry I dont think I answered for “size”. So let’s say “size” = 100% of balance @ execution price (with BTC as collateral) Then I successfully complete a long that I close at +1% from avg entry I am looking to close it and be fully hedged accounting for the new profits

Replying to

Got it. And when you say 'long'--since you're saying that 'flat' means 'all synthetic usd', then being flat means depositing BTC to e.g. BitMEX and selling BTCMEX futures to get flat (hedging your BTC collateral). Long would mean just depositing BTC and not trading.

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and

But I'm guessing that's not what you're saying--if by flat you mean 'flat except for the BTC collateral that you deposit', then: 1) deposit 1 BTC 2) Buy X contracts 3) 1% higher, sell X*1.01 contracts Then you bought X/P BTC and sold X/(P*1.01)*1.01 = X/P BTC

Replying to

and

Thank you, Sam! I am saying the former! By ‘flat’ I mean short the amount I deposited plus any gains. I am looking to be fully synthetic USD the entire account balance after each trade. What is P in your equation? 🙏🙏✊

Replying to

and

Would it simply be X*2.02 then? Or X*2.01?

SBF

@SBF_FTX

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@thalamu_

Ah makes sense! (Sorry, P is price.) So then it would be: 1) deposit 1 BTC 2) price goes up to 1.01P 3) short contracts to get flat At that point you'd still just have 1 BTC, and so you'd want to short 1.01*P contracts to be fully hedged

9:26 PM · Jun 24, 2020Twitter Web App

Replying to

and

Got it! Does it apply if I 1x long on top of deposit? buy 1 btc from FTX :) deposit 1 btc on mex. Btc P = $10k. I long 10k contracts on Mex. So I am net long 2 btc on mex or $20k. I want to be 100% synthetic USD after closing at +1%. Do I limit sell for 2.02(10k) or 2.01(10k)?

Replying to

and

It seems from your answer it’s 2.01(# of contracts). Idk why this kind of math is just not my forte ha. Thanks again!

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