**How to calculate the loss cut when adding a new order to an open position?**

If you add a new same-directional order to your existing position, then it will be merged into one position. This position will be averaged. You will get a new average price, a new average leverage and a new liquidation price. The volume of the entire position will also increase by adding the volume of each order (for example: a DOWN order with a volume of 0.4 BTC combined with a DOWN order with a volume of 0.6 BTC and the total volume of the averaged position becomes 1 BTC). A change in the leverage will also affect the trading fee, which will be calculated on the basis of a leverage that will be fixed at the time of a closure of the position.

For each position, a loss cut value (liquidation price) is automatically calculated and set.

You can calculate the loss cut value using the following formulas:

**For UP positions:***Execution price * (100% – (100% – ((fee% + fee%) * leverage + 15%)) / leverage);***For DOWN positions:***Execution price * (100% + (100% – ((fee% + fee%) * leverage + 15%)) / leverage).*

The loss cut value cannot be canceled or changed manually but it can be changed by adding an additional same-directional order to an open position.

Let’s look at an example:

There is an open UP BTC position that have been opened at the 9000 price with a volume of 0.5 BTC and with a 50x leverage. The loss cut for this position will be as follows:

9000 * (100% – (100% – ((0.075% (the trading fee for BTC for opening a position) + 0.075% (the trading fee for BTC for closing a position)) * 50x + 15%)) / 50x) = 8860.50.

Suppose the price goes down and you need to move the liquidation price lower. To do this, you need to add another UP order with a lower leverage, since it is necessary to reduce the initial leverage. In each position, the lower the leverage, the further the loss cut price is from the position opening price. The volume of the order that is added also matters. For example, if the volume of a new order is approximately equal or greater than in existing position, then the opening price of the averaged position will change significantly more than in the case of a small volume, and hence, the price of the loss cut will also be recalculated and significantly changed.

Let us return to our example.

For instance, you need to maximize the liquidation price using a new order. To do this, open a limit UP order at 8870 price with 1x leverage and an order volume equal to the position volume which is 0.5 BTC. To calculate the loss cut value, first, you have to calculate a new average leverage and a new average position open price.

In order to do this use the following formula:

*Average price = (Execution price 1 * order amount 1 * leverage 1 + Execution price 2 * order amount 2 * leverage 2 + … + Execution price (N) * order amount (N) * leverage (N)) / (Order amount 1 * leverage 1 + Order amount 2 * leverage 2 + … + Order amount (N) * leverage (N))*

*Average price = (9000 * 0.5 BTC * 50х + 8870 * 0.5 BTC * 1х) / (0.5 BTC * 50х + 0.5 BTC * 1х) = 8997.4510*

*Average leverage = (Order amount (1) * Leverage (1) + Order amount (2) * Leverage (2) + … + Order amount (n) * Leverage (n)) / (Order amount (1) + Order amount (2 ) + … + Order amount (n)).*

*Average leverage = (0.5 BTC * 50х + 0.5 BTC * 1х) / (0.5 BTC + 0.5 BTC) = 25.5х*

Now we know in advance both the average leverage (25.5x) and the average price of the position (8997.451) even before the orders are placed. Next, you can calculate value of the loss cut in case of averaging the position. You can do this according to the previously given loss cut formula:

**For UP positions:***8997.4510 * (100% – (100% – ((0.075% + 0.075%) * 25.5х + 15%)) / 25.5х) = 8711.0321*

Thus, we found the price of the loss cut even before we added a new order to the position.

Loss cut without adding a new order for UP position = **8860.50**

Loss cut after adding a new order for UP position =** 8711.0321**

Keep in mind that the risk of liquidation of a position in this case (as can be seen from the example) decreases, but the financial risk increases, since the volume of the entire position become larger. The initial risk was 0.5 BTC, and in the case of averaging in our example, the risk is 1 BTC.

**BitSeven is not responsible for the trading and decision-making of any trader. BitSeven also does not provide any trading recommendations. All risk lies entirely with the trader and everyone makes decisions regarding their trading risks.**

Based on provided formulas, you can independently calculate the values for future averaged positions. You can also use our calculator, which will calculate your values up to 5 averaged orders. Based on our calculator, you can pre-determine the average price of opening a position, the average leverage, the liquidation price and also the size of the trading fee. You need to select the number of orders, select the cryptocurrency available on our platform, select the direction of the position (UP or DOWN), enter the opening prices of each order and use the slider to select the leverage size. All values will be calculated automatically. The trading fee for each currency is already in the calculator.

We highly recommend that you double-check the data obtained on the calculator.

You can find more details regarding the trading fees on **BitSeven Trading Fees page**. Also, we have **an article on our blog** how to open and close positon on BitSeven as well.

You can use our **position calculator** to calculate your position.

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