Loss Cut is an automatic closing of a trading position when the size of losses approaches the full size of the position. Thanks to this, the total balance of your trading account is always protected, and possible losses do not exceed the size of open positions.
The Loss Cut is always set or recalculated automatically when any order is opened. The smaller the leverage used, the greater the movement the price must overcome in order to trigger an automatic close.
To find out the level of Loss Cut in %, use the formula:
Loss Cut % = 100% – ((fee% + fee%) * leverage + 15%)
You can also find out the exact liquidation price in one of the following ways:
- In the order confirmation window when opening a market or setting a limit order
- In the description of an open position on the [Positions] tab of the trading terminal
- Using the FYBIT Position Calculator. You can learn more about the calculator in this article.
- Calculate the liquidation price by yourself using the formula:
For UP positions:
Execution price * (100% – (100% – ((fee% + fee%) * leverage + 15%)) / leverage)
For DOWN positions:
Execution price * (100% + (100% – ((fee% + fee%) * leverage + 15%)) / leverage)
The following values are used in these formulas:
100% – the maximum possible price movement for a position, in which the loss will be completely the entire amount that is used to open a position.
15% – the guarantee level in case of sharp price jumps at the time of liquidation of the position. In the vast majority of cases, it is not used and is returned to the trader’s account after the position is closed.
fee% – the amount of the trading commission in %. You can find out the specific commission amount for each instrument on the Fees page: http://fybit.com/Home/FeesAndLimits
Leverage – The size of the leverage. You can select a different leverage size for each instrument, from 1x to 100x on the FYBIT trading platform.
For example, if you open a BTC Buy Order UP with 100x leverage at 45000 (any amount above the minimum 0.0005 BTC, because the size of the position has no effect on the Loss Cut), the value of the Loss Cut and the liquidation price will be as follows:
Loss Cut = 100% – ((fee% + fee%) * leverage + 15%) = 100% – ((0.075% + 0.075%) * 100 + 15%) = 70.00%
Liquidation price = Execution price * (100% – (100% – ((fee% + fee%) * leverage + 15%)) / leverage) = 45000 * (100% – (100% – ((0.075% + 0.075%) * 100+ 15%)) / 100) = 44685.0000
For another example, consider placing an ETH Buy Order DOWN with a leverage of 25x and an opening price of 3000:
Loss Cut = 100% – ((fee% + fee%) * leverage + 15%) = 100% – ((0.075% + 0.075%) * 25 + 15%) = 81.25%
Liquidation price = Execution price * (100% – (100% – ((fee% + fee%) * leverage + 15%)) / leverage) = 3000 * (100% + (100% – ((0.075% + 0.075%) * 25 + 15%)) / 25) = 3097.5000
To open an account on FYBIT and start trading BTC, ETH, ADA & BCH with up to 100x leverage, click here and follow the instructions on the page. If you have any questions, please contact Support.