The Differences in Profit and Loss Settlement Methods between Exchanges and AntBot

Introduction

This article aims to provide a detailed explanation of the differences in profit and loss settlement methods between cryptocurrency exchanges and AntBot robots during position liquidation. By providing examples and detailed explanations, we aim to help users understand the characteristics and application scenarios of these two settlement methods.

Profit and Loss Settlement based on Position Average Cost in Cryptocurrency Exchanges

When conducting position liquidation on cryptocurrency exchanges, a common method of settlement is based on the average cost of the position. Specifically, this method associates the overall profit and loss of the position with the average cost of the assets held. Here’s an example to illustrate the calculation method:

Let’s assume a user makes three separate purchases of 1 Bitcoin each on a cryptocurrency exchange, totaling 3 Bitcoins. The costs of each Bitcoin are $50, $60, and $70, resulting in a position with varying costs. When the user decides to liquidate a portion of the position, the settlement is calculated based on the average cost of the position. For instance, if the user sells any number of Bitcoins at an average cost of $65, the profit or loss will be equal to the average cost.

Let’s say one Bitcoin is sold at a market price of $80. The profit or loss per Bitcoin will be $80 – $65 = $15. Therefore, the profit or loss from the liquidation will be $15.

Profit and Loss Settlement based on Each Order in AntBot Robots

In contrast to cryptocurrency exchanges, AntBot robots employ a settlement method based on each individual order when conducting trade settlements. This means that the profit and loss of each order is calculated independently, without considering the average cost of the entire position. Here’s an example to illustrate the calculation method:

Using the same assumptions, let’s say the AntBot robot makes three separate purchases of 1 Bitcoin each on a cryptocurrency exchange, totaling 3 Bitcoins. The costs of each Bitcoin remain at $50, $60, and $70.

The robot sells the first purchased Bitcoin at a market price of $60, resulting in a profit of $60 – $50 = $10 for the first order. Similarly, the second Bitcoin is sold at a market price of $65, resulting in a profit of $65 – $60 = $5 for the second order. The profit or loss for the third Bitcoin depends on whether it is sold below or above $70.

Differences in Settlement Methods and Applicable Scenarios

The examples above illustrate the differences between cryptocurrency exchanges’ profit and loss settlement based on average position cost and AntBot robots’ settlement based on each individual order. These two methods have different focal points in settling profit and loss and are suitable for different trading strategies and goals.

• Cryptocurrency exchanges settle profits and losses based on the average position cost, disregarding individual orders. This method provides a straightforward calculation and allows for buying and selling positions of any size. It is particularly suitable for long-term holders and investors who tend to associate profits and losses with the average cost of their entire position. Their focus is primarily on overall profitability.
• On the other hand, AntBot settles profits and losses based on each individual order, meticulously recording the position and cost of each trade. This approach involves a more complex calculation and does not support selling positions of arbitrary sizes. It is better suited for short-term traders and frequent arbitrageurs who prioritize the independent profits and losses of each order. They are primarily concerned with the outcome of each individual trade.