How to cover positions in Bitcoin contracts

In order to avoid the risk of Bitcoin contract liquidation, traders can increase margins by covering positions. The steps to cover a position include: determining the direction of the position (long or short); calculating the quantity to cover the position; placing an order to cover the position on the trading platform; and adding a margin.

Bitcoin Contract Coverup

When the Bitcoin contract price fluctuates, traders can take cover-up operations to increase margins in order to avoid liquidation. Covering a position refers to adding a new contract in the same direction on the basis of the original contract.

Steps to cover the position:

1. Determine the direction of the position: Based on the current position, determine whether to add a long position or a short position.
2. Calculate the number of additional contracts: Calculate the number of contracts that need to be added based on the risk of liquidation and the available margin.
3. Place an order: On the trading platform, place an order to cover the position according to the specified contract direction and closing quantity.
4. Margin call: After placing an order to cover a position, you need to add the corresponding margin in time.

Example of position cover:

Xiao Ming holds 10 Bitcoin long positions, the current price is US$35,000, and the margin is US$5,000. Xiao Ming believes that the price of Bitcoin will continue to rise. In order to avoid being liquidated, he decides to cover 5 long positions.

• Determine the direction of margin call: Long position
• Calculate the number of margin call: 5 pieces
• Place an order:On the trading platform, place an order to buy 5 Bitcoin long positions
• Margin call: Additional margin required (5 contracts * US$35,000) = US$175,000

Advantages of cover-up:

• Reduce risk of liquidation
• Increase profit margins
• Adjust positions

Disadvantages of cover-up:

• Require additional funds
• It may increase the cost of holding a position
• If you make a mistake in judgment, it may aggravate your losses

It is worth noting that covering a position is not a panacea and it cannot completely eliminate the risk of liquidation. Therefore, traders should operate with caution based on their own risk tolerance and market conditions.

Bitcoin Market Dynamics

As of 18:00 on July 1, 2024, the price of Bitcoin (BTC) has stabilized at US$62,855.863717127, with a 24-hour trading volume of more than US$211.2 billion. In the past 24 hours, the price of Bitcoin has risen by 2.27897599%. The number of Bitcoins in circulation is 19.71 million, accounting for 94% of the total supply. The maximum supply is permanently limited to 21 million coins, ensuring Bitcoin’s scarcity and value. The huge circulating market capitalization, as high as 1.24 trillion US dollars, proves that Bitcoin has occupied a pivotal position in the global financial market.

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