🤖Understanding TON Margin Trading

Introduction to TON Margin Trading

Types of Margin Trading

Margin trading in cryptocurrencies can be categorized into two types:

• USD-Margin: In this type, traders use stablecoins like jUSDT as collateral.

• COIN-Margin: Here, cryptocurrencies such as BTC, ETH, or TON are used as collateral instead of stablecoins.

Futures margin trading in TON offers a unique and potentially profitable way to trade. In this type of futures contract, the quotation is in a quote asset (like USD), but the contract is nominated in another asset, which can be TON itself. This structure allows for amplified, non-linear returns, making it an attractive option for traders who are well-versed in market dynamics and risks. Yet, TON margin trading isn’t just for the pros. We at Storm Trade love making complex ideas simple. Read on, and you might just find yourself trading with the confidence of a seasoned expert.

TON Margin Benefits

• Cryptocurrency as Collateral: Use your TON tokens directly as collateral. Skip the hassle and fees of converting to stablecoins.

• Risk Mitigation: Avoid the unpredictability of stablecoin exchange rates. Stick to TON and trade with peace of mind.

• Strategic Hedging: Guard your portfolio against market downturns by trading for depreciation. It's smart, proactive protection.

• Amplified Earnings: A rising TON market doesn't just boost your trade profits. It also enhances the value of your TON collateral — as TON's value increases, so does your profit from the position; simultaneously, your collateral in TON also grows in value. Double delight!

• Earning Passively: Put your TON to work. Join a liquidity pool and earn passive income while you trade.

• Enhanced Liquidity: With more liquidity providers favouring TON, enjoy deeper market liquidity. Trade more, with less impact on prices.

How It Works

Key Concepts

• Base Asset: In TON margin trading, the base asset can vary, but typically it's the asset you are trading, such as TON itself. This is the primary asset of the trading pair.

• Quote Asset: This is usually a stable asset against which the base asset is traded, like USD. The contract price is quoted in this asset. When calculating gains and losses, you would typically peg the value to what you have as the base asset.

• Settlement Asset: Uniquely, in TON margin trading, the settlement asset is also TON if you choose to nominate the contract in it. This means both your margin and profits/losses are accounted in TON.

What’s Under the Hood?

Let’s do math:

PNL = (Trade direction * Margin * Entry_price * Leverage * (1 / Entry_price - 1 / Exit_price)) - Fee

What does it all add up to? We can break the formula down a bit:

1. Trade Direction:

   • This represents whether the trade is a long or a short.

   • For a long position (betting the price will go up), this value is 1.

   • For a short position (betting the price will go down), this value is -1.

2. Margin:

   • This is the amount of collateral the trader has put up for the trade. Our pick is TON as long as we’re considering TON margin trading.

3. Entry Price:

   • The price of the asset (TON) at the time the trader enters the trade.

4. Leverage

   • This is the factor by which the trader has increased their exposure beyond their actual margin. Higher leverage means higher exposure and potential profit or loss.

5. 1 / Entry Price - 1 / Exit Price:

   • This part of the formula calculates the relative change in the asset's price from entry to exit.

   • 1 / Entry Price gives the inverse of the entry price, and 1 / Exit Price gives the inverse of the exit price. This way, the calculation reflects the proportional change in value rather than just the absolute change in price. The difference between these inverses reflects the relative price change.

6. Fee

   • The TON margin trading fee is a bit higher than for USD margin trading, but it's still more affordable than what you'd usually pay on spot markets. Plus, trading in TON saves you the hassle and cost of swapping back and forth between TON and jUSDT. This makes the 0.2% trading fee worth it, especially for those looking to stick with TON. It's a smart move for savvy traders eyeing the long game on Storm Trade.

User The fee is calculated as follows:

>`0,2% * (margin*leverage)`

It's quite logical that when one enters the position, the margin is larger than the margin of a position being closed. Why? Because the fee for opening a trade had already been taken out of or added it. For instance, if a trader opens a position with a margin of 100 TON and a leverage of 10x, the opening fee would be 0.2% of the product of margin and leverage, equating to 2 TON (0.2% * 1000 TON). This makes the effective margin slightly less when closing the position due to the initial fee deduction.

Here's a yet greater level of detail on how you have your fees calculated with your TON used for margin:

• Opening Fee Formula:

  Opening Fee = 0.2% * (Margin * Leverage)

• Adjusted Margin for Closing Fee: After the opening fee is deducted, the adjusted margin for calculating the closing fee is

  Adjusted Margin = Margin - Opening Fee.

• Closing Fee Formula:

  Closing Fee = 0.2% * (Adjusted Margin * Leverage)

For example, if you open a trade with a 100 TON margin and 10x leverage and then close it, your fees come like this:

• Opening Fee: 0.2% * (100 * 10) = 2 TON

• Adjusted Margin for Closing: 100 TON - 2 TON = 98 TON

• Closing Fee: 0.2% * (98 * 10) = 1.96 TON

Example:

Trade data

Trader: Bob

Trade direction: Long

Position size: 100 TON

Entry price: 2 USD

Exit price: 4 USD

Leverage: x10

Fee: (0.2% of (100 * 2 * 10) = 4

PnL calculation

PNL = 1 * 100 * 2 * 10 * (1/2 - 1/4) - (0.2% of (100 * 2 * 10)= 2000 * 0.25 - 4 = 496 TON

Not bad, isn’t it? Bob has made an extra 496 TON, or 2000 USD without exiting TON for a second. And because his deposited collateral got two times as high in price, now Bob's wealth amounts to 2400 USD. Good job, Bob.

TON Margin Trading Ebb and Flow

Going Short

• Price Drop Scenario: If you go short and TON's price decreases, your collateral value decreases but your PnL increases. This is because the gains from the short position counteract the reduced collateral value.

• Price Rise Scenario: If TON's price unexpectedly rises while you're short, the increase in collateral value can help mitigate losses from the short position. However, high leverage could amplify the risk of collateral depletion.

Going Long

• Price Rise Scenario: Going long and seeing TON's price increase leads to gains in both your PnL and the collateral value. This scenario can bring double benefits from the rising market.

• Price Drop Scenario: If TON's price drops while you're in a long position, your collateral value decreases, which can offset gains from the long position. High leverage in this situation can increase the risk of significant collateral loss.

Risks and Considerations

• Volatile Collateral: TON's price volatility works both ways. While it can lead to higher profits, it also increases the risk of liquidation if the market moves against your position.

• Margin ratio: The margin ratio hinges on TON price: margin ratio = notional * TON price Therefore, it has to be carefully monitored. If TON's price falls significantly, your position could be at risk of liquidation.

Conclusion

TON margin trading on Storm Trade is an advanced trading mechanism that offers high potential rewards but comes with equally high risks due to the direct impact of TON's price volatility. Traders should engage with a clear understanding of these dynamics and a strategy to manage the associated risks. Fortune favours the brave – but only if they read the fine print.