The risk ratio marks the relative risk of the hAMM system.
At any moment, given the sum of total long positions and the sum of total short positions for all derivatives, position pool that stands for the all positions held can be illustrated as follows:
is always positive, is always negative, is always positive.
The value of determines the trading depth of a certain derivative.
The larger is, the better liquidity and better risk capacity for that derivative.
The formula of risk ratio is as follows:
is always positive and is always negative.
The sign of means the direction of risk.
and are total long or short positions for current derivative, and are total long or short positions for all derivatives.
Position pool is important to the risk control. When the value of is large enough, although , the total risk ratio is still rather limited. When the value of is small, a normal value of will significantly increase the risk ratio.
Position mining feature is designed to increase position pool.