Tradeway offers two distinct trading modes to match your trading style and risk preference. Whether you prefer automated risk management or full control over your trades, you can choose the mode that best fits your strategy.
1. Classic Mode
For traders who prefer a traditional approach, Classic Mode provides complete control over trade parameters, allowing you to manually manage risk and position sizing.
How it works:
Select your trade Quantity (Volume), which determines the Notional Value of your position.
Optionally, you can set a Stop Loss manually to limit potential losses according to your strategy. Unlike Smart Risk Mode, this mode does not automatically adjust risk settings—you decide the parameters.
Optionally, set a Take Profit level to lock in gains at your predefined target.
This mode is ideal for experienced traders who want the flexibility to customize their risk management settings.
Understanding Quantity and Notional Value in Classic Mode
Quantity refers to the size of your trade.
Notional Value is calculated as Quantity × Market Price. For example, if you trade 1 unit of an asset priced at $500, your Notional Value is $500.
Your Required Margin depends on the Notional Value and the leverage set on the chosen Instrument.
Key Benefits:
Full control: You define all trade parameters, including risk management.
Flexible strategies: Ideal for traders who prefer manual risk adjustments.
Custom stop-loss levels: Allows tailored risk protection.
Profit automation: Take Profit can be set to close positions at a desired profit level.
2. Smart Risk Mode
Designed for traders who want to manage risk efficiently while maximizing potential returns, Smart Risk Mode simplifies trade execution by automatically calculating your Stop Loss (Liquidation) price.
How it works:
Set your desired Risk (the amount of your balance you are willing to risk on a trade).
Choose a Multiplier to adjust your exposure. This factor amplifies the size of your trade relative to your balance, increasing potential gains and risks.
Tradeway will automatically determine the Stop Loss (Liquidation) price based on your risk settings, ensuring that your maximum loss is predefined.
Optionally, set a Take Profit level to automatically close the trade when your desired profit target is reached.
Key Benefits:
Predefined risk: You always know the maximum amount you can lose.
Simplified decision-making: No need to manually calculate Stop Loss.
Enhanced risk management: Helps control exposure while leveraging higher returns.
Profit automation: The option to set Take Profit ensures trades are closed at your target level.
Understanding Multipliers
A Multiplier determines the number of shares or units you can purchase based on your Risk. Selecting a Multiplier indirectly selects the purchase quantity of the asset you wish to trade. Since each asset on Tradeway has a defined minimum trading amount and step size, Multipliers are dynamically calculated to meet these requirements. If the market moves in the positive direction, the higher multiplier will result in a higher payout.
Let’s walk through a complete example:
You want to trade NVDA stock, currently priced at $140.
You enter a Risk amount of $20.
Tradeway calculates the minimum Multiplier as 7:
Risk $20 x 7 = $140 (enough to purchase one share of NVDA).
If you select a Multiplier of 14, your position size increases to two shares, and your Liquidation Price will be adjusted closer to the current market price.
Slippage Disclaimer
Please note that market conditions such as volatility and liquidity may cause the actual execution price to differ slightly from the displayed price. This phenomenon, known as slippage, can affect the outcome of your trades, particularly when using higher Multipliers. Be aware of potential variations and plan your trades accordingly.
Calculating Liquidation Price
The Liquidation Price, or Stop Loss price, is automatically calculated based on your selected Risk and Multiplier. This price indicates the level at which your trade will be automatically closed to limit your losses.
The higher the Multiplier, the closer the Liquidation Price will be to the current market price. This is because a higher Multiplier means a larger position size relative to your Risk amount, which results in less room for price fluctuation before reaching your risk limit.
Scenario 1: Buying 1 NVDA
If you purchase 1 NVDA at $140, your total position size is $140.
To risk $20, the Liquidation Price is calculated as:
Liquidation Price = Current Price - (Risk Amount / Traded Quantity).
Liquidation Price = $140 - $20 = $120.
Scenario 2: Buying 5 NVDA
If you purchase 5 NVDA at $140 each, your total position size is $700.
To risk $20, the Liquidation Price is calculated as:
Liquidation Price = Current Price - (Risk Amount / Traded Quantity).
Liquidation Price = $140 - ($20 / 5).
Liquidation Price = $140 - $4 = $136
In a nutshell, the Risk represents your participation in the position. Once the position value drops for the set Risk, we'll close your position to limit your losses.
Can Risk be updated in "Smart Risk" mode?
Yes. If you wish to update your desired Risk for the Open Position, navigate to the Position Details modal, enter the desired Loss or Stop Loss price, and update the position.
Choosing the Right Mode
Both trading modes are designed to cater to different trading styles. If you prefer a guided approach with automatic risk management, Smart Risk Mode is the right choice. If you want full control over your trades, Classic Mode is the way to go.
Select your preferred mode and start trading with confidence on Tradeway!