Hedging

Prerequisite

Trading will take place on Layer 2, and only USDC can be used as collateral. Therefore, please ensure that you have sufficient USDC in your wallet on Arbitrum. Or if you have USDT, USDe, DAI, GHO or WUSD, Gemnify offers a swapping function so that you can exchange any of these assets for USDC.

Market Order VS Limit Order

Gemnify supports opening position via creating market orders or limit orders.

A market order allows you to open/close a position immediately at the current best available price. This type of order is ideal when speed is a priority, but it may result in slippage, where the executed price is different from the expected price.

On the other hand, a limit order enables you to specify the exact price at which you want to enter position. The trade will only execute if the market reaches your desired price, offering more control over the transaction. However, there's a risk that the order may not be fulfilled if the market never reaches the specified price. Limit orders are particularly useful when you have a specific price target in mind and can afford to wait for the market to meet your conditions. Users can create Take Profit (TP) and Stop Loss (SL) orders to close a position. Read more below for details.

Opening a Position

Navigate to the Trade page, choose the asset you want to open a position on, then select between "Long" or "Short" to open a leverage position.

Long Position:

• Profit: When the asset's price rises.

• Loss: When the asset's price falls.

Short Position:

• Profit: When the asset's price falls.

• Loss: When the asset's price rises.

Enter the collateral amount and select leverage. Please be aware that selecting higher leverage increases the risk of liquidation if the market moves against your position. Please review all details, including fees and prices, located below the confirmation button.

Closing a Position

To close your positions, use the "Close" button located in the 'Position' tab. Closing a position can be done partially or entirely and will realize pending profits or losses proportionally based on the percentage of the position closed. For both Long and Short positions, profits are paid in USDC.

Stop Loss & Take Profit

A Stop Loss order automatically closes a position when the price reaches a predetermined level, limiting potential losses if the market moves against the trade. It acts as a safety net, helping traders avoid significant losses in volatile markets.

On the other hand, a Take Profit order automatically closes a position when the price hits a specified target, locking in profits once the market reaches a favorable price. This order helps traders ensure they capture gains without needing to constantly monitor the market.

Long Position:

• Stop Loss: limit price < market price.

• Take Profit: limit price > market price.

Short Position:

• Stop Loss: limit price > market price.

• Take Profit: limit price < market price.

Edit Position

Collateral can be added to or removed from a position. To avoid liquidation, select 'Add Collateral' if your position is close to being liquidated and you want to increase the collateral. If you wish to withdraw some margin, choose 'Remove Collateral.

Edit Order

As long as the order hasn't been executed, users can edit the limit price for a specific order at any time.