VOOI:positionTypes

Understanding Long and Short Positions in Leverage Trading

Positions can be one of two types:

1. Long Position

2. Short Position

Let's see how long and short positions work in leverage trading.

You place orders to open positions. For more information about order types, please refer to VOOI:orderTypes

Long Position

You borrow funds to buy assets, hoping their value rises.

• Opening a Position: Buy the asset.

• Closing a Position: Sell the asset.

• Automatic Closure: The position closes automatically, if the asset price drops to the liquidation price or lower to protect borrowed funds.

Positive Scenario	Negative Scenario
If the asset value rises, you sell the assets, return the borrowed funds and keep the profit. Example: You borrow USDC, buy 1 BTC at 30,000 USDC, sell at 35,000 USDC. Profit: 5,000 USDC.	If the asset value falls, you sell the asset, return the borrowed funds and incur losses. Example: You borrow USDC, buy 1 BTC at 30,000 USDC, sell at 25,000 USDC. Loss: 5,000 USDC.

Short Position

You borrow assets to sell, hoping their value drops.

• Opening a Position: Sell the borrowed asset.

• Closing a Position: Buy back the asset.

• Automatic Closure: The position closes automatically, if the asset price rises to the liquidation price or higher to protect borrowed assets.

Positive Scenario	Negative Scenario
If the asset value drops, you buy back the asset, return the borrowed assets and keep the profit. Example: You borrow BTC, sell 1 BTC at 30,000 USDC, buy back at 25,000 USDC. Profit: 5,000 USDC.	If the asset value rises, you sell the asset, return the borrowed assets and incur losses. Example: You borrow BTC, sell 1 BTC at 30,000 USDC, buy back at 35,000 USDC. Loss: 5,000 USDC.