> For the complete documentation index, see [llms.txt](https://hertzflow.gitbook.io/hertzflow-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hertzflow.gitbook.io/hertzflow-docs/trade-on-hertzflow/position-management.md).

# Position Management

## Position Lifecycle

Once your position is open, you can monitor it in real time. Each position shows:

* **Notional Size** — total position value
* **Net Value** — your collateral + unrealized PnL - accrued fees
* **Entry Price** — where you entered
* **Mark Price** — current oracle price
* **Liquidation Price** — the price at which your position auto-closes
* **TP / SL** — any active take profit or stop loss triggers

### Increasing a Position

You can add to an existing position by opening another order in the same direction on the same market. The system automatically merges them:

* Your **entry price** recalculates as a weighted average
* Your **leverage** adjusts based on the new collateral-to-size ratio
* Existing **TP/SL orders** are checked for validity against the updated position

### Reducing a Position

When you reduce a position, you choose one of two modes:

**Keep Leverage Off (default)** — reduces your position size while keeping all collateral in place. This effectively deleverages your position. You receive only the realized PnL from the closed portion; your collateral stays locked.

> **Example:** You have a $10,000 position with $1,000 collateral (10x leverage). You close 50% with Keep Leverage Off. Your position becomes $5,000 with $1,000 collateral (now 5x leverage). You receive the realized PnL on the $5,000 you closed.

**Keep Leverage On** — reduces both position size and collateral proportionally, maintaining your leverage ratio. You receive realized PnL plus proportional collateral back to your wallet.

> **Example:** Same setup. You close 50% with Keep Leverage On. Your position becomes $5,000 with $500 collateral (still 10x leverage). You receive $500 collateral + realized PnL.

### Editing Collateral

You can add or remove collateral without changing your position size:

| Action                | Effect                                                                                           |
| --------------------- | ------------------------------------------------------------------------------------------------ |
| **Add collateral**    | Moves liquidation price further away, increases leverage headroom, widens valid TP/SL boundaries |
| **Remove collateral** | Moves liquidation price closer to mark price, may invalidate existing TP/SL orders               |

{% hint style="warning" %}
When you remove collateral:

* **TP orders** beyond the new maximum are automatically adjusted to the new cap price
* **SL orders** outside the new -80% boundary are marked invalid — you'll see a warning and need to update them
* You cannot remove collateral below 10 USDT minimum or exceed max leverage limits
  {% endhint %}

## Order Parameters

When placing an order, you configure:

| Parameter         | Details                                                                                                                                          |
| ----------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ |
| **Side**          | Long (expect price to rise) or Short (expect price to fall)                                                                                      |
| **Order Type**    | Market / Limit / Trigger                                                                                                                         |
| **Collateral**    | USDT, minimum 10 USDT                                                                                                                            |
| **Leverage**      | From 1.1x up to each market's cap (e.g. 100x forex, 40x majors) — see [Market Structure](/hertzflow-docs/trade-on-hertzflow/market-structure.md) |
| **Position Size** | Automatically calculated: Collateral × Leverage                                                                                                  |
| **Slippage**      | Configurable per trade — orders exceeding tolerance will revert                                                                                  |
| **Entry Price**   | Market price for market orders; your set price for limit orders                                                                                  |
| **TP / SL**       | Optional exit triggers, bounded between -80% and +2500% PnL                                                                                      |

## Closing a Position

You can close via **market order** (immediate) or **TP/SL trigger** (automatic when price is reached):

* **Positive PnL:** You receive your collateral + profit, paid from the liquidity pool
* **Negative PnL:** You receive remaining collateral after losses; the loss goes to the liquidity pool
* **Partial close:** PnL is realized proportionally based on the closed portion

## Fee Structure

### Trading Fees

| Fee              | When Charged              | Rate                                                           |
| ---------------- | ------------------------- | -------------------------------------------------------------- |
| **Open Fee**     | When you open a position  | Varies by market                                               |
| **Close Fee**    | When you close a position | Varies by market                                               |
| **Price Impact** | Settles at close          | Dynamic, based on pool imbalance (can be positive or negative) |

### Holding Fees (per hour)

| Fee             | What It Is                                               |
| --------------- | -------------------------------------------------------- |
| **Funding Fee** | Paid between long and short traders based on market skew |
| **Borrow Fee**  | Paid to liquidity providers for borrowed capital         |

The **Net Rate** combines both into a single annualized percentage. Hover over the net rate in Market Info to see:

* **8-hour rate** — projected over 8 hours
* **24-hour rate** — projected daily rate
* **365-day rate** — projected annual rate (APR)
* **Hourly breakdown** — separate funding and borrow fee components

### Slippage Tolerance

Your market orders include configurable slippage tolerance. The acceptable price boundary is:

* **Market orders:** `Mark Price × (1 ± Price Impact) × (1 ± Slippage)`
* **Limit orders:** `Limit Price × (1 ± Price Impact)` (no slippage component)
* **TP/SL orders:** Execute at your trigger price with guaranteed execution — no slippage

The Price Impact term in these bounds is a protective limit for the **net impact settled at close** (see [Order Execution](/hertzflow-docs/trade-on-hertzflow/order-execution.md) — no impact is charged at open). The default 0.5% tolerance balances execution certainty with price precision. Increase it during volatile periods if your orders are reverting.

## Loss Rebate (Normal Mode Only)

If you open a Normal mode position on the **weaker side** of the open interest skew (e.g., going short when longs are dominant), you may qualify for a **Loss Rebate** — a partial reimbursement of your losses when you close.

### How It Works

* The rebate tier is determined by the OI skew at the time you **open** the position
* Once locked in, your rebate tier **does not change** — even if the skew rebalances while your position is open
* The rebate only applies if you **close at a loss**. Profitable positions receive no rebate.
* The rebate is calculated as a percentage of your realized loss and returned to your wallet at close

### Rebate Tiers

| OI Skew at Open | Loss Rebate                |
| --------------- | -------------------------- |
| 0% – 55%        | 0% (no rebate)             |
| 55% – 100%      | 0% → 20% (scales linearly) |

The exact rebate rate varies by asset and asset class (from 0% to 20%).

**Example:** You short ETH when the long/short OI skew is 75%. This locks in a \~10% loss rebate. Your position closes at -$500 loss. You receive $50 back as a loss rebate, reducing your effective loss to -$450.

{% hint style="info" %}
Loss Rebate is **not available** in Hyper Lev mode. It only applies to Normal mode positions that open on the weaker side of OI skew.
{% endhint %}

***

## Liquidation

Your position is automatically liquidated when the mark price reaches your liquidation price, preventing your account from going negative.

### Liquidation Price

Your liquidation price depends on your leverage, accrued fees, and the market's maintenance margin requirement.

**Example:** You open a 100x ETH long at $2,000 with $100 collateral ($10,000 position). Your liquidation price is approximately $1,982 — just \~0.9% below entry. At 10x leverage with the same entry, your liquidation price drops to approximately $1,810 — giving you significantly more room.

### What Happens When You're Liquidated

1. Your position closes automatically at market price
2. Remaining collateral (if any) returns to your wallet
3. A liquidation fee of **20 bps (0.20%)** of position size is charged
4. Any active TP/SL orders on the position are canceled

{% hint style="warning" %}
Monitor your liquidation price closely, especially with leverage above 50x. Consider adding collateral or setting a stop loss before your position gets too close to liquidation.
{% endhint %}

***

## Automatic Deleveraging (ADL)

ADL is a protocol safeguard that activates when aggregate trader unrealized profits become too large relative to pool AUM, threatening LP solvency.

### How ADL Works

| Parameter                                | Threshold       |
| ---------------------------------------- | --------------- |
| **Trader max profit (relative to pool)** | 90% of pool AUM |
| **ADL trigger**                          | 85% of pool AUM |
| **ADL completion floor**                 | 77% of pool AUM |

When total unrealized profits on one side (long or short) exceed 85% of pool AUM, the protocol automatically reduces the most profitable positions until aggregate unrealized PnL drops to 77%.

### What Happens During ADL

1. The protocol identifies the most profitable open positions on the affected side
2. Those positions are partially or fully closed at current mark price
3. Realized PnL is settled to the affected traders' wallets
4. The process continues until total unrealized PnL falls below the 77% floor

{% hint style="warning" %}
ADL is rare and only occurs during extreme directional moves. If your position is affected, you receive your realized PnL — no penalty is applied, but your position size is reduced without your action.
{% endhint %}


---

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