Welcome back to SnapEX Academy! This is SK, a SnapEx senior analyst.
For today's Lesson we will look into some of the basic terminology as well as order details to help you understand some of the basics.
For the ease of understanding, I will try to describe each terms in more natural languages, as some definition on the web probably give you hard time understanding as they use a lot of financial terms.
Account Balance (Shown as "Available"): Account Balance is how much you have at current moment that is accessible for trading.
Equity: How much your account truly worth right now.
P/L (Profit & Loss) : Profit or loss from a closed trade.
Floating P/L : Profit or Loss from a currently opened position.
Used Margin: The amount of money you have placed to open a position (but it's still yours).
Frozen/Freeze: Amount of Margin you have placed for a limit order to ensure it's validity (but it's still yours).
For the ease of display and understanding, SnapEx combines Used Margin and Frozen together under Frozen.
So based on above information, you can see that:
Equity = Account Balance + Frozen + Used Margin + Floating P/L
If you have no any other open position,
Equity = Account Balance
If you have a Limit Order with 100 USDT as margin, (assuming your original equity was 1,000
Equity = Account Balance + Frozen = 900 + 100 = 1,000
Remember, your frozen part of the margin was taken from your account balance and secured as "Frozen".
If you have a open position with 100 USDT as margin, with a current floating P/L of +20 USDT, ( Assuming your original equity was 1,000)
Equity = Account Balance + Frozen + Used Margin + Floating = 900 + 0 + 100 +20 = 1,020
And your Equity will be floating or moving as long as the price in the market moves. Only when you close the position, do your account balance gets finalized, and so does your equity.
Now let's get in to some of the terms related to trading.
When you go into the "Trade" Page of SnapEx App
BID: Price where you can Sell or Short at this current moment
ASK: Price where you can Buy or Long at this current moment
High: Highest price of the current day
Low: Lowest price of the current day
Buy/Long : order when you project that the market is going UP in the future
Sell/Short : order when you project that the market is going DOWN in the future
When you clock either Buy/Long or Sell/Short Button, you will see the following order menu:
Market: Also known as market order, which is where you place the order right now at the price of Ask for Long orders, and Bid for Short orders
Limit: Also known as limit order or pending limit order, which is where you place a "pending" order and Higher or Lower price then the current price, so when the market moves to your pending order's price point, it will then get executed according to your desired direction.
Margin: Amount of margin you wish you to place
Leverage: we have studied the effects of leverage on lesson 1, simply Margin times Leverage equals how much you are buying or selling.
SL (Stop Loss) / TP (Take Profit): This is where it gets little tricky, as SnapEx has set those parameters in order to protect client's positions in a highly volatile situation.
One key thing of SnapEx Simple Contract Trading (SCT) is that your forced liquidation points are calculated based on your Used margin, not your entire equity of the account.
This means, if you have placed an order with 100 USDT Margin, the maximum loss would 90 USDT regardless of how much you have in the account balance.
Back to the SL/TP section, by default, SnapEx sets 20% SL level and 80% TP level, and SL and TP are automatically calculated by the system.
This means, if you have placed an order with 100 USDT Margin regardless of your leverage:
When your P/L become -80, then your position will be liquidated or closed (20% left based on your Margin)
When your P/L become +80, then your position will be liquidated or closed (80% won based on your Margin)
In SnapEx, we allow clients to further extend this liquidation points to SL of 10% level and TP of 100% by client's sole discretion.
Therefore, with maximum SL and TP levels
When your P/L become -90, then your position will be liquidated or closed (10% left based on your Margin)
When your P/L become +100, then your position will be liquidated or closed (100% won based on your Margin)
By adjusting, the SL and TP price you will automatically see what your Target Loss and Profit.
That's it for today's lesson, and I hope you would get more familiar with our SnapEx platform.