How to lock positions in Poloniex contracts

By placing a limit order with a specified time-in-force, traders can effectively lock their positions in Poloniex contracts to protect their profits or limit their losses.

Nov 27, 2024 at 01:51 am

How to Lock Positions in Poloniex Contracts

Introduction

Locking positions in Poloniex contracts is a strategy that allows traders to protect their profits or limit their losses in the event of adverse price movements. By locking their positions, traders can effectively remove them from the market and prevent further execution against those positions. This technique is particularly useful in highly volatile markets or when traders anticipate significant price swings. In this guide, we will provide a step-by-step explanation of how to lock positions in Poloniex contracts.

Step 1: Select a Contract and Position

• Begin by selecting the Poloniex contract you wish to lock a position in. Poloniex offers a wide range of perpetual and futures contracts, including popular cryptocurrencies like Bitcoin, Ethereum, and Litecoin.
• Once you have selected a contract, determine whether you want to lock a long or short position. A long position implies you anticipate the price of the underlying asset to rise, while a short position implies you expect it to fall.

Step 2: Calculate the Position Size

• Calculate the position size you wish to lock. This refers to the number of contracts you want to enter into. Consider your risk tolerance, trading strategy, and the potential market volatility when determining the position size.

Step 3: Place a Limit Order

• Place a limit order at the desired price level where you want to lock your position. A limit order is an order to buy or sell an asset only when the market price reaches a specified limit price or better.
• If locking a long position, place a buy limit order at a price above the current market price. If locking a short position, place a sell limit order below the current market price.

Step 4: Set the Time-in-Force

• Specify the time-in-force (TIF) for your limit order. TIF determines the duration for which the order will remain active in the market.
• For locking positions, it is recommended to use a TIF of 'Good Till Canceled' (GTC). This ensures that your order stays on the order book until it is executed or canceled manually.

Step 5: Activate the Locked Position

• Once the market price reaches your specified limit price, your limit order will be executed and your position will be locked.
• Locked positions are marked with a padlock icon in the Poloniex trading interface. The position will remain locked until you manually unlock it or until the contract expires.

Step 6: Unlock the Position

• To unlock a locked position, navigate to the 'Your Positions' tab in the Poloniex trading interface.
• Select the locked position you want to unlock and click on the 'Unlock Position' button.
• The position will be immediately unlocked and returned to the active market.

Additional Considerations

• Slippage: Be aware that when executing large orders, there may be some slippage from your desired lock price.
• Market Conditions: Understand the market conditions and potential volatility before locking positions. Rapid price movements or large market orders can impact your locked position.
• Risk Management: Locking positions does not eliminate risk. Always adhere to sound risk management principles and never expose yourself to losses beyond your financial capabilities.