BYBIT QA Refresher Sharing 2 PDF

QA Refresher Sharing 2 General Order Types: Position Closing 14th Sept 2023 Agenda 1. Overview of Position Closing 2. Case Reviews: Common Mistakes and Solutions 3. Q&A Session  Overview of Position Closing Overview of Position Closing Close-by Function Traders can c...

QA Refresher Sharing 2 General Order Types: Position Closing 14th Sept 2023 Agenda 1. Overview of Position Closing 2. Case Reviews: Common Mistakes and Solutions 3. Q&A Session  Overview of Position Closing Overview of Position Closing Close-by Function Traders can close their current position by clicking on the Close By "Limit" or ”Market" - On Desktop Web Browser: - On Mobile APP: Overview of Position Closing Order Zone Trader may place a new order in the opposite direction of your current position. The position will be closed once the order has gone through. For instance, if you currently hold a LONG position of 1 BTCUSDT, you can close it by placing a SHORT order for 1 BTCUSDT. - On Desktop Web Browser: On Mobile APP: Case Reviews Reduce-Only Scenario The trader wants to profit from his open long position by placing a limit order with 'reduce-only' selected. However, the error message below appears. Reduce-Only Reason The error message appears because the trader is attempting to place another buy/long limit order (in same trading direction). When 'reduce-only' is selected, the system cancels the order placement to prevent unintentional position openings. Reduce-Only Real Case Review 1 The trader has an open long position and wishes to close it but encounters the error message “Invalid Reduce-Only Order. Order may increase position size.” Visitor: should i sell thru the close by limit/market Agent: Please kindly specify the issue, I don't quite understand you Visitor: So in order to sell, i need to make a short order? Visitor: i haven‘t tried selling it because i don’t know what will be the effect Agent: Short order is the sell order, if you have a long position and you open the short order it will reduce your position. Grader’s comment: The agent failed to address the trader's inquiry regarding whether he should close the position via a limit order or a market order. It is essential for the agent to inquire about the trader's preference, specifically if he intends to use a limit order to take profit or if he prefers to close the position immediately at the best available price. Reduce-Only Real Case Review 1 The trader has an open long position and wishes to close it but encounters the error message of “Invalid Reduce-Only Order. Order may increase position size.” Visitor: should i sell thru the close by limit/market Agent: Please kindly specify the issue, I don't quite understand you Visitor: So in order to sell, i need to make a short order? Visitor: i haven‘t tried selling it because i don’t know what will be the effect Agent: Short order is the sell order, if you have a long position and you open the short order it will reduce your position. Grader’s comment: To add value to the interaction, the agent may suggest that the trader first practices trading on our testnet platform or engages in demo trading (UTA mode) to become familiar with the Bybit platform before transitioning to real coin trading on the mainnet. The agent could also provide additional insights into the distinctions between the two types of accounts. Reduce-Only Real Case Review 1 The trader has an open long position and wishes to close it but encounters the error message of “Invalid Reduce-Only Order. Order may increase position size.” Visitor: should i sell thru the close by limit/market Agent: Please kindly specify the issue, I don't quite understand you Visitor: So in order to sell, i need to make a short order? Visitor: i haven‘t tried selling it because i don’t know what will be the effect Agent: Short order is the sell order, if you have a long position and you open the short order it will reduce your position. *Upon checking the BOS, the trader was in one-way mode* Grader’s comment: In one-way mode, the agent should advise the trader to select "Reduce Only" if he plans to enter a short limit order from the order zone to close his existing long position. This is to avoid unintentionally opening a position in the opposite direction. Alternatively, the agent can recommend using the "Close By" function. Reduce-Only Real Case Review 1 Proposed Solution: 1. Check the contract type, whether it’s an Inverse Perpetual Contract or a USDT Perpetual Contract - If it’s a USDT perpetual contract, determine the position mode - Examine the BOS to identify the trading direction of the affected open position and any active reduce-only orders relevant to the issue 2. Understand the trader’s intentions, particularly if the trader would like to TP or SL and, and identify the actions that led to the error message 3. If the trader plans to use a limit order for taking profit, suggest placing it in the opposite direction: - In One-Way Mode: Advise a limit order in the opposite direction with Reduce-only selected - In Hedge Mode: Advise using the 'Close' tab and selecting 'Limit Order' in the Order Zone - Alternatively, propose using the 'Close by Limit' function in the position tab 4. Advise selecting the Post-Only and provide a disclaimer regarding the risk of non-execution of limit order Conditional Market Order as Stop-Loss Real Case Review 2 The trader would like to set a stop loss that can be filled immediately upon triggered. Visitor: this is a stop loss that confirmed will be filled right? Visitor: used huobi before and that is stop-limit, it was triggered, but not filled >< Grader’s comment: In this case, the trader intends to set a stop loss that ensures execution. The built-in TP/SL function or conditional market order with close on trigger selected (One-way mode) and mark price as the trigger basis could be suggested with further elaboration needed (e.g. Pros and Cons of using LTP or Mark Price to trigger conditional orders) Conditional Market Order as Stop-Loss Real Case Review 3 The trader would like to set up an exit order where the desired entry price is worse than the current market price. Visitor: Is there a reason for why can’t you set a limit order below the current price to cut loss? Agent: It will be immediately executed as a market order Visitor: Yeah but why doesn’t Bybit allow me to place a limit short order below LTP Agent: There’s no going around that, I am sorry. Grader’s comment: The agent should emphasize that when setting up orders to exit a trade, particularly for scenarios where the desired entry price is worse than the market price (stop loss), the suitable option is the conditional market order. When the trigger price set is reached, a market order will be placed into the order book. Once the order is triggered and placed, the execution logic works the same as the market order. Conditional Market Order as Stop-Loss Real Case Review 2 & 3 Proposed Solution: 1. Provide an explanation of how the conditional market order functions 2. With an open position: Utilize the built-in TP/SL function accessible through the position tab. Without an open position: Configure it in the order zone while placing a new order. 3. Select Mark Price as reference price 4. Include the pros and cons of selecting Mark Price (MP) or Last Traded Price (LTP) as the reference price 5. Include an explanation of the concept of slippage and taker fees. Limit Order as Stop-Loss Real Case Review 4 The trader intends to use a limit order for setting a stop-loss, either to reduce taker fees or to ensure a guaranteed price execution. Visitor: Since market orders are taking too much fee, I thought I would use limit order for stop-loss Visitor: But I want to know how to place a limit order below the current market price Visitor: basically use a limit order to close my position instead of regular stop loss Grader’s comment: A limit order should NOT be used to set a stop-loss as the trigger price for stop loss is always worse than the current last traded price. The agent should clarify that the purpose of a stop-loss is to minimize potential losses for a position and necessitates immediate execution. Limit Order as Stop-Loss Real Case Review 4 The trader intends to use a limit order for setting a stop-loss, either to reduce taker fees or to ensure a guaranteed price execution. Visitor: Can I do the same as a cut loss method? I put it as a limit order Agent: To do so, you may consider using a conditional limit order to place the trigger price lower than your long entry price Agent: You may refer here for more info on setting up conditional order: https://www.bybit.com/en-US/help-center/s/article/What-is-a-limit-market-conditional-order Grader’s comment: The agent should clarify that a limit order should NOT be used as a stop loss. The agent is responsible for elaborating on the importance of immediate execution when it comes to limiting losses. There is an inherent risk of the order not being filled when traders use any form of limit orders as closing order. A general disclaimer such as, “Please note that a limit order or “close by limit order” cannot be set as a stop loss because the trigger price for stop-loss is always worse than the current last traded price and the execution of limit orders is not guaranteed” should be provided. Conditional Limit Order as Stop-Loss Real Case Review 5 The trader intends to use a conditional limit order for setting a stop-loss, either to reduce taker fees or to ensure a guaranteed price execution. Visitor: How can I limit my stop loss? Agent A: You can consider placing a conditional limit order in the opposite direction which will serve the purpose of a limit stop loss Visitor: I need to place a open short conditional limit order? To close it as limit? Agent A: You are right Visitor: Can I do the same as a cut loss method? I put it as a limit order Agent B: To do so, you may consider using a conditional limit order to place the trigger price lower than your long entry price Agent B: You may refer the help center article for more info on setting up conditional order: https://www.bybit.com/en-US/help-center/s/article/What-is-a-limit-market-conditional-order Conditional Limit Order as Stop-Loss Real Case Review 5 The trader intends to use a conditional limit order for setting a stop-loss, either to reduce taker fees or to ensure a guaranteed price execution. Grader’s comment: The agent failed to advise the client on what is the risk involved by using a conditional limit order to act as a substitute for a stop loss. Also, the conditional limit order upon the trigger needs to have a distance for the order price to be better. There is no guarantee that the order will be executed which live chat agent should understand that for stop-loss, execution is always the priority, regardless of what the client mentions in the first place about avoiding the taker’s fee. This is a fundamental risk of conditional limit order that the agent is required to advise. Second of all, when advising closing conditional order by manually placing in the opposite direction, the agent should always mention close on trigger, to ensure the quantity to close is matched and system does not evaluate this as an independent order and add on to the contact size consideration. Conditional Limit Order as Stop-Loss Real Case Review 5 Proposed solution: 1. Ensure that the trader is aware of the risk of non-execution associated with limit orders, and this risk should be clearly communicated. 2. Emphasize the importance of selecting 'close on trigger' to ensure the system recognizes the opposite order as a closing order. 3. For USDT perpetual contracts, confirm that the trader's position mode is set to One-Way Mode. 4. When the trader intends to place a conditional limit maker order, make sure to select "Post-Only". To correctly set up the conditional limit maker order: - To close a buy/long position (Short Order), the order price must be HIGHER than the trigger price. - To close a sell/short position (Long Order), the order price must be LOWER than the trigger price at that time. Conditional Limit Order as Take-Profit Real Case Review 6 The trader reported that the take-profit order for his short position was executed at an incorrect price. Visitor: I was in a short with my take profit set at 0.6355 but the trade closed at 0.6359. Visitor: i was looking at the chart and the price went right straight to my take profit and didn’t came up but still falling Conditional Limit Order as Take-Profit Real Case Review 6 The trader reported that the take-profit order for his short position was executed at an incorrect price. Proposed solution: 1. Explain the concept of slippage 2. Support the explanation with a 1-minute price chart analysis 3. If the trader wishes to have price guarantee or aims to pay lesser taker fees when taking profit, suggest using the "close by limit" function available in the position tab. However, the risk of no execution guarantee should be clearly communicated 4. To correctly set up the "close by limit" function: a. To close a buy/long position, the order price set must be HIGHER than the market price at that time. b. To close a sell/short position, the order price must be LOWER than the market price at that time. 5. Select the “Post-Only” function to ensure the limit order is executed as maker order Q&A Thank you!