ADL (Position Reduction) is an indicator used to measure the probability of automatic position reduction. It calculates the position level based on factors such as unrealized profit/loss, position profit/loss percentage, and position leverage. It utilizes a queue and indicator lights to indicate the likelihood of position reduction to the user.
Here are the calculation steps for the ADL indicator:
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Calculate the current position value: Current position value = Current mark price * contract multiplier * total position
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Calculate unrealized profit/loss for long positions: Unrealized profit/loss for long positions = Current position value - cumulative opening value
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Calculate unrealized profit/loss percentage for short positions: Position profit/loss percentage = Unrealized profit/loss / cumulative opening value
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Calculate position profit/loss percentage: Divide unrealized profit/loss by cumulative opening value to obtain the position profit/loss relative to the opening value as a percentage
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Calculate position leverage: Position leverage = Current position value / (unrealized profit/loss + position margin)
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Calculate the position level based on the positive or negative value of unrealized profit/loss:
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If unrealized profit/loss ≥ 0, position level = position profit/loss percentage * position leverage
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If unrealized profit/loss < 0, position level = position profit/loss percentage / position leverage
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Queue the positions: Sort all positions based on the position level in descending order, with higher position levels at the front. If positions have the same level, prioritize larger position quantities.
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Determine the number of indicator lights based on the queue position:
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For positions in the same contract and direction, if the queue position is between 0% and 20%, the indicator light displays five bars (-----), indicating a high probability of position reduction.
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If the queue position is between 20% and 40%, the indicator light displays four bars (----), indicating a relatively high probability of position reduction.
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If the queue position is between 40% and 60%, the indicator light displays three bars (---), indicating a lower probability of position reduction.
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If the queue position is between 60% and 80%, the indicator light displays two bars (--), indicating a very low probability of position reduction.
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If the queue position is between 80% and 100%, the indicator light displays one bar (-), indicating a minimal possibility of position reduction.
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The more indicator lights are illuminated, the higher the probability of position reduction. Therefore, the ADL indicator can help users understand the risk of position reduction and make appropriate decisions, such as timely position reduction or adjusting position allocation.