Exercise 4: First Position Setup and Management

⏰ Time Investment: 45-60 minutes 🎯 Goal: Create a complete plan for your first perpetual position with proper risk management

📚 Required Reading Integration 📖 Primary: Lesson 4: Your First Perpetual Position 📖 Supporting: Lesson 2: The Mathematics of Perpetual Trading, Lesson 3: Architecture Types

📋 Phase 1: Pre-Trade Planning (15 minutes)

Exercise 1: Position Planning Worksheet

Fill out this worksheet before opening any position:

Protocol Selection:

• Chosen Protocol: _______

• Architecture Type: _______

• Why this protocol: _________________________________

Market Selection:

• Trading Pair: _______

• Current Spot Price: $_______

• Current Perpetual Price: $_______

• Funding Rate: _______% per hour

• Annualized Funding: _______%

Position Configuration:

• Direction: Long / Short

• Available Capital: $_______

• Risk Per Trade: _______% (recommended: 1-5%)

• Margin to Use: $_______

• Leverage: _______x

• Position Size: $_______

Risk Parameters:

• Entry Price: $_______

• Liquidation Price: $_______

• Safety Buffer: _______%

• Stop Loss: $_______

• Take Profit: $_______

Exercise 2: Pre-Trade Checklist

Complete this checklist before executing:

• Funding rate checked and acceptable (< 0.05% per hour)

• Open interest checked (healthy and growing)

• Liquidation price calculated

• Safety buffer verified (20-30% minimum)

• Stop loss set

• Position size appropriate (1-5% of capital)

• Leverage conservative (3x-5x for first trade)

• Margin mode: Isolated (not cross)

• Network configured correctly

• Gas fees accounted for

Any unchecked items? List them and address before trading:

📊 Phase 2: Position Setup Calculations (15 minutes)

Exercise 3: Complete Position Math

Your Plan:

• Protocol: GMX V2

• Market: ETH/USD

• Direction: Long

• Available Capital: $10,000

• Risk Per Trade: 2%

Calculate:

• Maximum Risk: $_______

• Margin to Use: $_______

• Leverage: 5x

• Position Size: $_______

• Entry Price: $2,500 (current)

• Liquidation Price: $_______

• Safety Buffer: _______%

Funding Analysis:

• Current Funding Rate: 0.01% per hour

• Daily Funding Cost: $_______

• Weekly Funding Cost: $_______

Break-Even Analysis:

• Trading Fees (0.05%): $_______

• Weekly Funding: $_______

• Total Costs: $_______

• Break-Even Price Movement: _______%

Exercise 4: Risk Scenario Planning

Plan for different outcomes:

Price Movement	Unrealized P&L	Funding Cost (7 days)	Net P&L	Action Plan
+5%	$_______	$_______	$_______	_______
+2%	$_______	$_______	$_______	_______
0%	$_______	$_______	$_______	_______
-2%	$_______	$_______	$_______	_______
-5%	$_______	$_______	$_______	_______
-10% (liquidation)	$_______	$_______	$_______	_______

Question: At what price would you add margin? Why?

• Price: $_______

• Reasoning: _________________________________

💡 Phase 3: Execution Plan (10 minutes)

Exercise 5: Step-by-Step Execution

Write out your exact execution steps:

1. Wallet Setup:

   • Wallet: _______

   • Network: _______

   • Status: [ ] Connected

2. Deposit:

   • Amount: $_______

   • Asset: _______

   • Status: [ ] Deposited

3. Market Analysis:

   • Funding Rate: _______% (acceptable? Yes/No)

   • Open Interest: $_______ (healthy? Yes/No)

   • Current Price: $_______

4. Order Configuration:

   • Type: Market / Limit

   • Price: $_______

   • Size: $_______

   • Leverage: _______x

   • Margin Mode: Isolated / Cross

5. Risk Controls:

   • Stop Loss: $_______

   • Take Profit: $_______

6. Execution:

   • Review all parameters

   • Execute order

   • Confirm transaction

   • Verify position opened

Exercise 6: Monitoring Plan

Create your monitoring schedule:

Immediate (First Hour):

• Check: [ ] Position opened correctly

• Check: [ ] Liquidation price correct

• Check: [ ] Funding rate hasn't changed

Daily Checks:

• Current price vs entry

• Unrealized P&L

• Distance to liquidation

• Funding costs accumulated

Weekly Review:

• Overall P&L including fees

• Whether to hold or close

• Lessons learned

Alert Thresholds:

• Price within 5% of liquidation: [ ] Alert set

• Funding rate > 0.05%/hour: [ ] Alert set

• Unrealized loss > 50% of margin: [ ] Alert set

🎯 Phase 4: Position Management Scenarios (15 minutes)

Exercise 7: Scenario Response Planning

Scenario 1: Price Moves Against You

• Entry: $2,500

• Current: $2,450 (-2%)

• Liquidation: $2,000

• Unrealized Loss: $_______

Your Response:

• Close position (cut losses)

• Add margin (if still confident)

• Do nothing (if within plan)

• Other: _______

Reasoning: _________________________________

Scenario 2: Price Moves in Your Favor

• Entry: $2,500

• Current: $2,600 (+4%)

• Unrealized Profit: $_______

Your Response:

• Close 50% (lock profits)

• Move stop loss to break-even

• Let it run to take profit

• Other: _______

Reasoning: _________________________________

Scenario 3: Funding Rate Spikes

• Original: 0.01% per hour

• Current: 0.05% per hour (5x increase)

• Daily cost now: $_______

Your Response:

• Close position immediately

• Monitor closely

• Do nothing (short-term spike)

• Other: _______

Reasoning: _________________________________

Exercise 8: Exit Strategy Planning

Define your exit conditions:

Take Profit Exits:

• Target 1 (partial): $_______ (close 50%)

• Target 2 (full): $_______ (close remaining)

Stop Loss Exits:

• Hard Stop: $_______

• Trailing Stop: Yes / No (if yes, explain: _______)

Time-Based Exits:

• Maximum Hold Time: _______ days

• Reason: _________________________________

Condition-Based Exits:

• Close if funding > _______% per hour

• Close if liquidation within _______%

• Close if fundamental change: _______

✅ Phase 5: Post-Trade Reflection (10 minutes)

Exercise 9: Trade Journal Entry

After closing your position, complete this:

Position Monitoring Log

Position Planning Template

Trade Summary:

• Entry: $_______

• Exit: $_______

• Duration: _______ days

• Final P&L: $_______

• ROI: _______%

What Went Well:

What Could Improve:

Lessons Learned:

Would You Trade This Again? Yes / No

• Why: _________________________________

Exercise 10: Risk Management Review

Assess your risk management:

• Position size was appropriate

• Leverage was conservative

• Stop loss was set and respected

• Funding costs were accounted for

• Monitoring was adequate

• Exit strategy was followed

Areas for Improvement:

🎯 Self-Assessment

Rate your readiness (1 = Not ready, 5 = Fully ready):

• Understanding of position mechanics: __/5

• Ability to calculate risks: __/5

• Confidence in execution: __/5

• Risk management plan: __/5

• Monitoring strategy: __/5

Ready to open first position? Yes / No

• If no, what do you need to review? _________________________________

🚀 Next Steps

Before Opening Position:

1. Complete all exercises above

2. Review any areas scoring < 4

3. Practice on testnet if available

4. Start with smallest position possible

5. Monitor closely for first few trades

After First Position:

1. Complete trade journal

2. Review what you learned

3. Adjust plan for next trade

4. Proceed to Module 2 (Protocol Mastery)

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