Study Notes | Average Entry Price
① Adding to a long position at a price below the average entry price lowers the average entry price, but it also increases your position size, so a drop of the same magnitude will result in a larger loss.
② You pay a fee when opening and closing a position, and both fees are calculated based on the notional value. So the price needs to move a little further than the average entry price for you to break even.
③ Before adding to your position, consider your total position size and new liquidation price. Don’t focus only on making the average entry price look better.
$BTC 81939.39（+0.8%）
① Adding to a long position at a price below the average entry price lowers the average entry price, but it also increases your position size, so a drop of the same magnitude will result in a larger loss.
② You pay a fee when opening and closing a position, and both fees are calculated based on the notional value. So the price needs to move a little further than the average entry price for you to break even.
③ Before adding to your position, consider your total position size and new liquidation price. Don’t focus only on making the average entry price look better.
$BTC 81939.39（+0.8%）