Last Updated on March 15, 2023 by Bitfinsider

Introduction To ETF Trading

Trading ETFs includes purchasing and reselling ETF shares on a market. The price of an ETF is decided by the exchange rate at the time of purchase. The price of the ETF shares will fluctuate along with the worth of the underlying assets.

In general, trading ETFs can be a useful method for investors to get exposure to a variety of assets while also taking the benefits of trading on an exchange. Before making an investment in an ETF, it is crucial to thoroughly weigh the risks and potential rewards, as with all investments.

All About Scallop Leveraged ETFs

Scallop Leveraged ETFs are tradable securities traded on the Scallop spot market that use long/short positions in the underlying asset to increase earnings. A 1% increase in the price of Ethereum, for instance, will result in a 3% increase in the price of ETH3L and a 3% decrease in the price of ETH3S. Holding leveraged tokens involves no collateral or margin upkeep, unlike margin trading or futures trading, and there is no liquidation risk.

Each Scallop Leveraged ETF represents a single share of a leveraged fund. The fund manager makes sure that the returns on the fund are calculated using a specific multiple of the underlying asset and that investors can benefit from that specific multiple of underlying asset gains. In order to limit the total loss, a rebalancing mechanism is used when the price volatility on the other side surpasses the threshold.

Scallop Leveraged ETF is a good option for one-sided markets but a poor choice for volatile markets due to the rebalancing mechanism. Higher intraday losses may occur when volatility is significant. As usual, traders should exercise caution when investing. 

Scallop ETFs Guide

To start trading ETFs on Scallop Exchange, you need to create an account. The process in itself is very easy, as the registration requires only an email address and password. You can refer to our guide on the step-by-step registration process here. Note that you will be required to verify your email. Once your account is verified and ready to go, you can deposit funds into your account by following our guide here.

Once funds are deposited,return to the homepage and click on “ETF”. Search for your cryptocurrency of interest and click on “Trade” on the right. For this example, we will use “BTC” Note that you are required to select ‘Long’ or ‘Short’ for your trading preference, denoted as ‘L’ or ‘S’ respectively. As a general rule of thumb,take a Buy/Long position if you believe the asset will increase in value, and a Sell/Short position if you believe the price will decrease. For more information on long/short positions, please refer to our detailed explanation here.

You will see an interface as shown below. If you have been following us through our guides, you will notice that it is similar to the Spot Trading process. From here, you are only required to choose whether you want to buy or sell your cryptocurrency of interest (at the bottom of the page, which depends on whether you are buying a Long position or Selling a Short position.

Before you proceed, we would like to stress once again that using high leverage is a very risky move that could lead to losses and should only be used by experienced traders who can manage their risks. 

Note: Take a Buy/Long position if you believe the asset will increase in value, and a Sell/Short position if you believe the price will decrease.