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When HLP liquidates Alice's position, my understanding is that it first seizes the remaining maintenance margin as part of the liquidation process. Then, to replace Alice as the counterparty and keep the market balanced, HLP effectively creates the opposite side of Alice's position. This ensures that the trader who was originally matched against Alice still has a counterparty after the liquidation.(in this case, HLP).
Is this correct ?
When HLP liquidates Alice's position, my understanding is that it first seizes the remaining maintenance margin as part of the liquidation process. Then, to replace Alice as the counterparty and keep the market balanced, HLP effectively creates the opposite side of Alice's position. This ensures that the trader who was originally matched against Alice still has a counterparty after the liquidation.(in this case, HLP).
Is this correct ?
In that case, liquidity might not be too good, because if most people long, and HLP doesn't take short side anymore, then lots of people will NOT be able to long as there will not be opposite side on short :/
In that case, liquidity might not be too good, because if most people long, and HLP doesn't take short side anymore, then lots of people will NOT be able to long as there will not be opposite side on short :/
so in extreme cases where most people long and market is also going into long direction, creating short and long by HLP would incur the loss, right ? so in this case, HLP does NOT make both short and long right ?
so in extreme cases where most people long and market is also going into long direction, creating short and long by HLP would incur the loss, right ? so in this case, HLP does NOT make both short and long right ?
hey all, i was curious how HLP works.
does it always try to make long/short orders at the same time in order to get a profit from spread ?
hey all, i was curious how HLP works.
does it always try to make long/short orders at the same time in order to get a profit from spread ?