Calculation formula for margin replenishment in the currency circle
- WBOYOriginal
- 2024-07-16 15:22:00479browse
The calculation formula for position replenishment in the currency circle is: Amount of replenishment = (Existing total funds / Existing position) - Existing position cost, which can be used to reduce the average cost of position. By calculating the amount of replenishment, investors can determine the number of additional currencies that need to be added based on existing funds and positions, thereby optimizing investment strategies.
The calculation formula of the currency circle's position replenishment
Get straight to the point:
The calculation formula of the currency circle's position replenishment is: Total replenishment amount = (existing total funds / existing position) - existing position cost
Detailed expansion:
- Liquidation amount: The number of currencies that need to be added.
- Total current funds: The funds currently available in the account.
- Existing positions: The number of currencies currently held.
- Existing holding cost: The average price spent when buying the currency.
Formula meaning:
This formula calculates the required amount of cover to reduce the average holding cost of the portfolio to the target cost you set. Specifically:
- Total existing funds divided by existing positions: Calculate the average holding cost.
- Average holding cost minus existing holding cost: Calculate the cost difference that needs to be reduced.
- The cost difference is multiplied by the existing position: The number of currencies that need to be covered is obtained.
Example:
Suppose you hold 10 Bitcoins with an average cost of $10,000. The current market price is $8,000 and you want to reduce the average cost to $9,000.
- Existing total funds: set to 100,000 USD
- Existing position: 10 Bitcoins
- Existing position cost: 10,000 USD
- Target cost: 9,000 USD
Use the formula to calculate:
Cover position Amount = ($100,000 / 10 Bitcoins) - $10,000 = 2 Bitcoins
Conclusion:
According to the formula, you need to cover 2 Bitcoins to reduce your average holding cost to $9,000.
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