February 6, 2023

Risk-fraud, like stop -30% is a -42% depot without fee and slippage. Bitmex

I am engaged in writing a tester for rollbacks on the reverse, I made all the logic, filling, calculations, outputs, statistics, etc., but only for 1 buffer i.e. there can only be 1 position at a time. I will expand further, but before that I came across one thing that was not obvious to me.

When trading in BTC nominal, the pair BTCUSD calculates the risk and p / l is not considered the same as for any pair of the ETHBTC type (BTC is not at the beginning, but at the end of the name).
The point is the depreciation or revaluation of the asset of the nominal value of the deposit in this case. I give an example in the picture.

Risk-fraud, like stop -30% is a -42% depot without fee and slippage. Bitmex

Those. conclusions, price increase by + 30%, if for the whole cutlet, then this is not a fig not + 30%, but 23% of the depot.
If we put the risk that we close at -30% with long and want to lose 30% of the balance, we will lose 43%. And this is without commissions and slippage!

And the larger the size%, the greater the error. -1% / + 2% is not so noticeable.

Those. in such cases, trading BTCUSD shorts is less risky due to the bias of the expectation, and it is better not to go into long with big stops. In short, you also do not need to use margin, which makes a long position even more dangerous.

Now I’ve sat down to think how to gain a formula for calculating risk and the logic of trading in such a situation.

I wonder how many people who trade on the bitmex exchange (nomination in BTC, the main pair of BTCUSD) do not know about it and grab it in long from the market like me‍♂️

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I also keep a diary on developments, deals and steps to build my hedge fund here - t.me/drsombre