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Trading Strategy
There are two trading strategies on AlphaX, which are opening LONG and SHORT positions.
LONG
If you are bullish on an asset pick a LONG Strike Token (Asset-X) on AlphaX from the MARKET page. Now choose the price floor or the price that you think the value of this asset will not fall to, and multiply that price by 1.2. The answer is the value at which your LONG Strike Token is liquidated.
SHORT
If you are bearish on an asset pick a SHORT Strike Token (y-Asset) on AlphaX from the MARKET page. Now choose the price ceiling or the price that you think the value of this asset will not rise to, and divide that price by 1.2. The answer is the value at which your SHORT Strike Token is liquidated.
Before Buying!
Another important factor that you may need to consider is how much capital efficiency is this position. This is the factor that is multiply to the value change of the underlying asset, in which it turns into your profit. For instance, with a capital efficiency of 2X, if the underlying asset value increases by 10% (assuming that you bought the LONG Strike Token) then your net profit will be 20% (10% x 2).
How to Calculate Capital Efficiency?
To calculate the capital efficiency divide the price of the underlying asset by the price of the Strike Token you purchased. Nevertheless, the value of the capital efficiency is subject to change depending on the price of the underlying asset.
Price of Underlying Asset Increases
If the price of the underlying asset moves further away from the selected price floor/ceiling, then the capital efficiency decreases.
Price of Underlying Asset Decreases
If the price of the underlying asset moves closer to the selected price floor/ceiling, then the capital efficiency increases.
Capital Efficiency Table for Calculating Profits and Losses
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