> ## Documentation Index
> Fetch the complete documentation index at: https://docs.limora.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Trading Overview

> Learn how trading works on Limora

Limora enables leveraged trading of cryptocurrencies against stablecoins. This guide covers the fundamentals of trading on the platform.

***

## How Trading Works

Limora operates on a peer-to-peer matching model:

```mermaid theme={null}
sequenceDiagram
    participant T as Trader
    participant L as Limora Protocol
    participant M as Matcher
    participant O as Oracle

    T->>L: Open Trade Request
    L->>L: Validate & Queue
    M->>L: Match Trade
    L->>O: Get Entry Price
    L->>L: Activate Position

    Note over T,M: Position is now active

    T->>L: Close Trade
    L->>O: Get Exit Price
    L->>L: Calculate P&L
    L->>T: Return Collateral ± P&L
    L->>M: Return Collateral ∓ P&L + Interest
```

***

## The Trader's Role

Traders are the active participants who speculate on market movements. By opening leveraged positions, you seek to profit from price changes in either direction.

| Activity        | Role                      | Reward/Risk                          |
| :-------------- | :------------------------ | :----------------------------------- |
| **Open Long**   | Bet on price increase     | Profit if price rises, Loss if falls |
| **Open Short**  | Bet on price decrease     | Profit if price falls, Loss if rises |
| **Manage Risk** | Use Stop-Loss/Take-Profit | Protect capital and secure gains     |

***

## Position Types

### Long Positions

Open a **long** position when you believe the asset price will increase.

<Card title="Long Example" icon="arrow-trend-up">
  **Scenario**: You believe BTC will rise from \$50,000

  * Open long with 100 USDC collateral at 10x leverage
  * Position size: 1,000 USDC
  * If BTC rises 5% to \$52,500: You profit \~50 USDC (50% return)
  * If BTC falls 5% to \$47,500: You lose \~50 USDC (50% loss)
</Card>

### Short Positions

Open a **short** position when you believe the asset price will decrease.

<Card title="Short Example" icon="arrow-trend-down">
  **Scenario**: You believe ETH will fall from \$3,000

  * Open short with 100 USDC collateral at 5x leverage
  * Position size: 500 USDC
  * If ETH falls 10% to \$2,700: You profit \~50 USDC (50% return)
  * If ETH rises 10% to \$3,300: You lose \~50 USDC (50% loss)
</Card>

***

## Key Concepts

### Collateral

The amount you deposit to open a position. This serves as your margin and determines your maximum loss (excluding fees).

### Leverage

The multiplier applied to your collateral to determine your position size.

```
Position Size = Collateral × Leverage
```

| Leverage | Position Size (on 100 USDC) | Price Move for 100% P\&L |
| -------- | --------------------------- | ------------------------ |
| 2x       | 200 USDC                    | 50%                      |
| 5x       | 500 USDC                    | 20%                      |
| 10x      | 1,000 USDC                  | 10%                      |
| 25x      | 2,500 USDC                  | 4%                       |
| 50x      | 5,000 USDC                  | 2%                       |

### Liquidation Price

The price at which your position will be automatically closed to prevent further losses.

```
Liquidation Price (Long) = Entry Price × (1 - 1/Leverage × (1 - Maintenance Margin))
Liquidation Price (Short) = Entry Price × (1 + 1/Leverage × (1 - Maintenance Margin))
```

<Warning>
  Higher leverage means your liquidation price is closer to your entry price.
  Use appropriate leverage for your risk tolerance.
</Warning>

***

## Trading Interface

The trading page consists of several key components:

### Order Form

Where you configure and submit trades:

* **Trading pair selector**: Choose the asset to trade
* **Direction toggle**: Long or Short
* **Collateral input**: Amount to use as margin
* **Leverage slider**: Multiply your exposure
* **Stop-loss/Take-profit**: Optional risk management

### Price Chart

Real-time chart showing:

* Current oracle price
* Historical price action
* Your entry and liquidation prices (when in a position)

### Position Panel

Displays your active positions with:

* Entry price and current price
* Unrealized P\&L
* Position size and leverage
* Time held and interest accrued

***

## Trade States

Trades progress through several states:

<Steps>
  <Step title="Pending">
    Trade request submitted, waiting for a matcher to provide liquidity.
  </Step>

  <Step title="Active">Position is live, P\&L updating in real-time.</Step>
  <Step title="Closing">Close request submitted, awaiting settlement.</Step>
  <Step title="Closed">Position settled, funds returned to balance.</Step>
</Steps>

Additional states:

* **Cancelled**: Trader cancelled the pending request
* **Liquidated**: Position closed due to insufficient margin
* **Expired**: Pending trade not matched within time limit

***

## Available Trading Pairs

| Pair     | Max Leverage | Min Collateral |
| -------- | ------------ | -------------- |
| BTC/USDC | 50x          | 10 USDC        |
| ETH/USDC | 50x          | 10 USDC        |
| SOL/USDC | 9x           | 10 USDC        |
| ARB/USDC | 9x           | 10 USDC        |
| OP/USDC  | 9x           | 10 USDC        |

<Note>
  Trading pair availability and parameters may change. Check the app for current
  offerings.
</Note>

***

## Best Practices

<AccordionGroup>
  <Accordion title="Start with low leverage">
    Begin with 2-5x leverage to understand the platform before using higher
    multipliers. Higher leverage amplifies both gains and losses.
  </Accordion>

  <Accordion title="Always use stop-losses">
    Set a stop-loss on every trade to limit potential losses. This is especially
    important for leveraged positions.
  </Accordion>

  <Accordion title="Manage position sizing">
    Don't risk more than 1-5% of your total capital on a single trade. Diversify
    your risk across multiple positions.
  </Accordion>

  <Accordion title="Monitor open positions">
    Check your positions regularly, especially during volatile market
    conditions. Be prepared to act if the market moves against you.
  </Accordion>

  <Accordion title="Understand fees">
    Factor in trading fees and interest costs when calculating potential
    profits. Review the [fees page](/trading/fees) for details.
  </Accordion>
</AccordionGroup>

***

## Next Steps

<CardGroup cols={2}>
  <Card title="Wallet Setup" icon="wallet" href="/trading/wallet-setup">
    Configure your wallet for Limora.
  </Card>

  <Card title="Opening Trades" icon="arrow-right" href="/trading/opening-trades">
    Step-by-step guide to opening positions.
  </Card>

  <Card title="Leverage Guide" icon="scale-balanced" href="/trading/leverage">
    Understanding leverage and risk.
  </Card>

  <Card title="Fee Structure" icon="receipt" href="/trading/fees">
    Complete breakdown of trading costs.
  </Card>
</CardGroup>