Wiki
Biturai Trading Wiki
The Biturai crypto encyclopedia: AI-assisted, data-informed, and continuously quality-audited.
Understanding Liquidation Cascades and Risk Protection
Liquidation cascades occur when a series of forced position closures in leveraged trading triggers further market movements, leading to more liquidations.
Funding Rate Risk in Perpetual Positions
Perpetual futures contracts allow traders to speculate on asset prices without an expiration date, but they introduce a unique cost known as the funding rate.
Selecting Safe Leverage: Aligning Leverage with Volatility and Stop-Loss
Choosing the right leverage in crypto trading is a critical risk management decision that involves dynamically linking your leverage ratio to market volatility and your stop-loss placement.
Effective Leverage vs. Nominal Leverage: Measuring True Risk in Crypto Trading
Understanding the difference between effective and nominal leverage is fundamental for accurate risk assessment in crypto trading.
Edge Ratio: Evaluating Trading Advantage with MFE and MAE
The Edge Ratio is a powerful metric that helps traders quantify the profitability and efficiency of their trading strategies.
Monitoring Margin Ratio: Managing Distance to Liquidation
Understanding and actively monitoring your margin ratio is fundamental for any trader utilizing leverage in cryptocurrency markets. This metric provides a clear indication of your position's health and its proximity to forced liquidation.
Maintenance Margin: Understanding the Equity Threshold in Leveraged Trading
The maintenance margin represents the minimum equity required in a margin account to keep a leveraged position open. Failing to meet this threshold triggers a margin call, potentially leading to forced liquidation of assets.
Maximum Adverse Excursion in Trade Management
Maximum Adverse Excursion (MAE) quantifies the largest unrealized loss a trading position experiences from its entry point until it closes or reverses.
Isolated Margin: Limiting Risk Per Position in Crypto Trading
Isolated margin is a method in margin trading that confines the capital and borrowed funds to a single trading position, isolating its risk from the rest of a trader's account.
Calculating Liquidation Price in Cross-Margin vs. Isolated-Margin
Margin trading modes, Isolated Margin and Cross Margin, handle liquidation differently.
Why Martingale Averaging Down is Ruinous in Crypto Trading
The Martingale strategy, which involves doubling down on losing trades, is a high-risk approach that can lead to catastrophic losses in crypto markets.
Anti-Martingale Position Sizing: Increasing on Wins, Decreasing on Losses
The Anti-Martingale strategy is a position-sizing method where traders increase their trade size after winning trades and reduce it after losing ones.
Drawdown Recovery Plan: Reducing Position Size After Losses
A drawdown recovery plan involves strategically reducing position sizes after experiencing losses to manage risk and facilitate a sustainable return to profitability.
Making a Position Risk-Free After Partial Profit-Taking
Making a position risk-free involves adjusting the stop-loss to the entry price after taking partial profits, ensuring no loss on the initial capital. This strategy protects investments and reduces psychological trading pressure.
Pyramiding with Profits: Scaling Positions Risk-Neutrally
Pyramiding with profits is a trading strategy where a trader adds to a winning position without increasing the initial capital at risk.
Scale-Out: Selling a Profitable Position Incrementally
Scaling out is a strategic approach where traders gradually sell portions of a profitable investment as its price rises.
Scaling In: Gradually Building a Position
Scaling in is a strategic approach where an investor builds a position in an asset by purchasing it in multiple, smaller increments over time.
Loss-Streak Rule: Pausing After Consecutive Losing Trades
A loss-streak rule is a critical risk management protocol that mandates a temporary pause from trading after a specific number of consecutive losing trades.
Limiting Simultaneous Positions as a Risk Rule
Limiting the number of open trading positions simultaneously is a fundamental risk management strategy. This approach prevents overexposure to market fluctuations and helps preserve trading capital.
Correlation-Adjusted Portfolio Heat for Open Trades
Correlation-adjusted portfolio heat measures the total potential loss across all open trades, considering how asset prices move in relation to each other.