freqtrade_origin/en/2022.4.2/leverage/index.html

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<h1 id="trading-with-leverage">Trading with Leverage<a class="headerlink" href="#trading-with-leverage" title="Permanent link">&para;</a></h1>
<div class="admonition warning">
<p class="admonition-title">Beta feature</p>
<p>This feature is still in it's testing phase. Should you notice something you think is wrong please let us know via Discord or via Github Issue.</p>
</div>
<div class="admonition note">
<p class="admonition-title">Multiple bots on one account</p>
<p>You can't run 2 bots on the same account with leverage. For leveraged / margin trading, freqtrade assumes it's the only user of the account, and all liquidation levels are calculated based on this assumption.</p>
</div>
<div class="admonition danger">
<p class="admonition-title">Trading with leverage is very risky</p>
<p>Do not trade with a leverage &gt; 1 using a strategy that hasn't shown positive results in a live run using the spot market. Check the stoploss of your strategy. With a leverage of 2, a stoploss of 0.5 (50%) would be too low, and these trades would be liquidated before reaching that stoploss.
We do not assume any responsibility for eventual losses that occur from using this software or this mode.</p>
<p>Please only use advanced trading modes when you know how freqtrade (and your strategy) works.
Also, never risk more than what you can afford to lose.</p>
</div>
<p>Please read the <a href="../strategy_migration/#strategy-migration-between-v2-and-v3">strategy migration guide</a> to migrate your strategy from a freqtrade v2 strategy, to v3 strategy that can short and trade futures.</p>
<h2 id="shorting">Shorting<a class="headerlink" href="#shorting" title="Permanent link">&para;</a></h2>
<p>Shorting is not possible when trading with <a href="#understand-tradingmode"><code>trading_mode</code></a> set to <code>spot</code>. To short trade, <code>trading_mode</code> must be set to <code>margin</code>(currently unavailable) or <a href="#futures"><code>futures</code></a>, with <a href="#margin-mode"><code>margin_mode</code></a> set to <code>cross</code>(currently unavailable) or <a href="#isolated-margin-mode"><code>isolated</code></a></p>
<p>For a strategy to short, the strategy class must set the class variable <code>can_short = True</code></p>
<p>Please read <a href="../strategy-customization/#entry-signal-rules">strategy customization</a> for instructions on how to set signals to enter and exit short trades.</p>
<h2 id="understand-trading_mode">Understand <code>trading_mode</code><a class="headerlink" href="#understand-trading_mode" title="Permanent link">&para;</a></h2>
<p>The possible values are: <code>spot</code> (default), <code>margin</code>(<em>Currently unavailable</em>) or <code>futures</code>.</p>
<h3 id="spot">Spot<a class="headerlink" href="#spot" title="Permanent link">&para;</a></h3>
<p>Regular trading mode (low risk)</p>
<ul>
<li>Long trades only (No short trades).</li>
<li>No leverage.</li>
<li>No Liquidation.</li>
<li>Profits gained/lost are equal to the change in value of the assets (minus trading fees).</li>
</ul>
<h3 id="leverage-trading-modes">Leverage trading modes<a class="headerlink" href="#leverage-trading-modes" title="Permanent link">&para;</a></h3>
<p>With leverage, a trader borrows capital from the exchange. The capital must be re-payed fully to the exchange (potentially with interest), and the trader keeps any profits, or pays any losses, from any trades made using the borrowed capital.</p>
<p>Because the capital must always be re-payed, exchanges will <strong>liquidate</strong> (forcefully sell the traders assets) a trade made using borrowed capital when the total value of assets in the leverage account drops to a certain point (a point where the total value of losses is less than the value of the collateral that the trader actually owns in the leverage account), in order to ensure that the trader has enough capital to pay the borrowed assets back to the exchange. The exchange will also charge a <strong>liquidation fee</strong>, adding to the traders losses.</p>
<p>For this reason, <strong>DO NOT TRADE WITH LEVERAGE IF YOU DON'T KNOW EXACTLY WHAT YOUR DOING. LEVERAGE TRADING IS HIGH RISK, AND CAN RESULT IN THE VALUE OF YOUR ASSETS DROPPING TO 0 VERY QUICKLY, WITH NO CHANCE OF INCREASING IN VALUE AGAIN.</strong></p>
<h4 id="margin-currently-unavailable">Margin (currently unavailable)<a class="headerlink" href="#margin-currently-unavailable" title="Permanent link">&para;</a></h4>
<p>Trading occurs on the spot market, but the exchange lends currency to you in an amount equal to the chosen leverage. You pay the amount lent to you back to the exchange with interest, and your profits/losses are multiplied by the leverage specified.</p>
<h4 id="futures">Futures<a class="headerlink" href="#futures" title="Permanent link">&para;</a></h4>
<p>Perpetual swaps (also known as Perpetual Futures) are contracts traded at a price that is closely tied to the underlying asset they are based off of (ex.). You are not trading the actual asset but instead are trading a derivative contract. Perpetual swap contracts can last indefinitely, in contrast to futures or option contracts.</p>
<p>In addition to the gains/losses from the change in price of the futures contract, traders also exchange <em>funding fees</em>, which are gains/losses worth an amount that is derived from the difference in price between the futures contract and the underlying asset. The difference in price between a futures contract and the underlying asset varies between exchanges.</p>
<p>To trade in futures markets, you'll have to set <code>trading_mode</code> to "futures".
You will also have to pick a "margin mode" (explanation below) - with freqtrade currently only supporting isolated margin.</p>
<div class="highlight"><pre><span></span><code><span class="nt">&quot;trading_mode&quot;</span><span class="p">:</span><span class="w"> </span><span class="s2">&quot;futures&quot;</span><span class="p">,</span>
<span class="nt">&quot;margin_mode&quot;</span><span class="p">:</span><span class="w"> </span><span class="s2">&quot;isolated&quot;</span>
</code></pre></div>
<h3 id="margin-mode">Margin mode<a class="headerlink" href="#margin-mode" title="Permanent link">&para;</a></h3>
<p>The possible values are: <code>isolated</code>, or <code>cross</code>(<em>currently unavailable</em>)</p>
<h4 id="isolated-margin-mode">Isolated margin mode<a class="headerlink" href="#isolated-margin-mode" title="Permanent link">&para;</a></h4>
<p>Each market(trading pair), keeps collateral in a separate account</p>
<div class="highlight"><pre><span></span><code><span class="nt">&quot;margin_mode&quot;</span><span class="p">:</span><span class="w"> </span><span class="s2">&quot;isolated&quot;</span>
</code></pre></div>
<h4 id="cross-margin-mode-currently-unavailable">Cross margin mode (currently unavailable)<a class="headerlink" href="#cross-margin-mode-currently-unavailable" title="Permanent link">&para;</a></h4>
<p>One account is used to share collateral between markets (trading pairs). Margin is taken from total account balance to avoid liquidation when needed.</p>
<div class="highlight"><pre><span></span><code><span class="nt">&quot;margin_mode&quot;</span><span class="p">:</span><span class="w"> </span><span class="s2">&quot;cross&quot;</span>
</code></pre></div>
<h2 id="understand-liquidation_buffer">Understand <code>liquidation_buffer</code><a class="headerlink" href="#understand-liquidation_buffer" title="Permanent link">&para;</a></h2>
<p><em>Defaults to <code>0.05</code></em></p>
<p>A ratio specifying how large of a safety net to place between the liquidation price and the stoploss to prevent a position from reaching the liquidation price.
This artificial liquidation price is calculated as:</p>
<p><code>freqtrade_liquidation_price = liquidation_price ± (abs(open_rate - liquidation_price) * liquidation_buffer)</code></p>
<ul>
<li><code>±</code> = <code>+</code> for long trades</li>
<li><code>±</code> = <code>-</code> for short trades</li>
</ul>
<p>Possible values are any floats between 0.0 and 0.99</p>
<p><strong>ex:</strong> If a trade is entered at a price of 10 coin/USDT, and the liquidation price of this trade is 8 coin/USDT, then with <code>liquidation_buffer</code> set to <code>0.05</code> the minimum stoploss for this trade would be <span class="arithmatex">\(8 + ((10 - 8) * 0.05) = 8 + 0.1 = 8.1\)</span></p>
<div class="admonition danger">
<p class="admonition-title">A <code>liquidation_buffer</code> of 0.0, or a low <code>liquidation_buffer</code> is likely to result in liquidations, and liquidation fees</p>
<p>Currently Freqtrade is able to calculate liquidation prices, but does not calculate liquidation fees. Setting your <code>liquidation_buffer</code> to 0.0, or using a low <code>liquidation_buffer</code> could result in your positions being liquidated. Freqtrade does not track liquidation fees, so liquidations will result in inaccurate profit/loss results for your bot. If you use a low <code>liquidation_buffer</code>, it is recommended to use <code>stoploss_on_exchange</code> if your exchange supports this.</p>
</div>
<h3 id="developer">Developer<a class="headerlink" href="#developer" title="Permanent link">&para;</a></h3>
<h4 id="margin-mode_1">Margin mode<a class="headerlink" href="#margin-mode_1" title="Permanent link">&para;</a></h4>
<p>For shorts, the currency which pays the interest fee for the <code>borrowed</code> currency is purchased at the same time of the closing trade (This means that the amount purchased in short closing trades is greater than the amount sold in short opening trades).</p>
<p>For longs, the currency which pays the interest fee for the <code>borrowed</code> will already be owned by the user and does not need to be purchased. The interest is subtracted from the <code>close_value</code> of the trade.</p>
<p>All Fees are included in <code>current_profit</code> calculations during the trade.</p>
<h4 id="futures-mode">Futures mode<a class="headerlink" href="#futures-mode" title="Permanent link">&para;</a></h4>
<p>Funding fees are either added or subtracted from the total amount of a trade</p>
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