Trading Basics
A practical guide to opening, managing, and closing positions on Jetty.
Opening a Position
To open a swap, you choose three things:
- Market. Which rate you want to trade (e.g., SOL perp funding on Binance).
- Tenor. How long the swap lasts (e.g., 30 days, 90 days). You can pick any valid day within the market's window.
- Direction and size. Whether you're pay-fixed or receive-fixed, and how much notional.
The protocol quotes you a fixed rate based on the current yield curve and the price impact of your trade size. Larger trades push the rate further, similar to slippage on a spot AMM. You also see the fee and the margin required before confirming.
Margin
Positions are margined. You post collateral (a fraction of your notional) into a margin account. This is what makes swaps capital-efficient: you don't need to put up the full notional amount.
Your margin account holds all your positions and collateral in one place. The protocol tracks two margin levels:
- Initial margin (IM). The minimum collateral required to open or increase a position.
- Maintenance margin (MM). The minimum required to keep a position open. This is lower than IM.
As long as your account equity stays above total maintenance margin, your positions are safe.
Monitoring Your Position
While your position is open, keep an eye on:
- Realized PnL. Funding that has already accrued based on the difference between your fixed rate and the actual floating rate.
- Unrealized PnL (mark-to-market). The value of closing at the current market rate. This fluctuates as the yield curve moves.
- Health. Your total equity minus total maintenance margin across all positions. If this goes negative, you're eligible for liquidation.
Settlement is lazy, meaning your funding PnL is calculated whenever your position is touched (by a trade, a close, or a liquidation), not on a fixed schedule.
Closing a Position
You can close your position at any time before maturity. When you close, you're effectively entering an offsetting swap at the current market rate. The difference between your entry rate and exit rate, plus any accrued funding, determines your final PnL.
You can also partially close if you want to reduce your size without fully exiting.
If you don't close before maturity, the position settles automatically using the oracle's historical rate data for the period your swap covered.
Liquidation
If your account health drops below zero, anyone can liquidate part of your position. Here's how it works:
- Only the minimum amount needed to restore your health is closed.
- The liquidator takes over that portion of your position directly. No AMM interaction, no slippage.
- A penalty is charged and split between the liquidator, the protocol, and LPs.
- You keep the rest of your position and remaining collateral.
- You can never lose more than your posted collateral.
The best way to avoid liquidation is to monitor your health and either add collateral or reduce your position if things move against you.
Market States
Markets can be in one of three states:
- Normal. All trading is open.
- Closing Only. You can reduce or close positions, but not open new ones.
- Halted. Trading is paused. Liquidations may still be enabled.
Next Steps
- Markets for what you can trade on Jetty.
- Understanding Swaps for a deeper look at how swaps and PnL work.