Overlapping Liquidity

Overlapping strategy involves concentrating your position by buying and selling within a personalized price range, aimed at establishing a bid-ask spread that adjusts with market movements.

Overlapping Liquidity

Utilizing the robust HydroTrade engine, Overlapping strategies empower users to establish a concentrated liquidity position. This approach mirrors the trading dynamics of AMMs, where buy and sell prices consistently adjust together along a symmetrical bonding curve. Users leveraging this feature can regulate the spread, granting greater control over the fee applied between the provided buy and sell prices.

Choosing Price Range

Prices can be adjusted by moving the chart indicators in either direction or by entering the precise value into the corresponding input field located below the chart area.

The strategy can be configured with price ranges above, below, or around the current market price.

• Selecting "Above market price" will configure the strategy to begin with a Sell High budget, ready to sell when the market price rises into the specified range.

• Opting for "Below market price" will configure the strategy to start with a Buy Low budget, prepared to buy as soon as the market price falls into the specified range.

• Choosing "Around market price" will set the strategy to start with both Buy Low and Sell High budgets, available for use as the market price moves in either direction.

When adjusting prices, the system displays the proximity of the minimum and maximum prices to the current market price. This is shown as the percentage change required to align the current price with the set price limits, assisting users in making informed decisions.

Indicate Spread

The spread value determines the gap between the prices of the Buy and Sell orders, effectively functioning as a fee set by the strategy owner.

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Calculating the Spread into price units:
Spread: 1%
Min Buy Price: 1500
Max Sell Price: 2000
This will result in 2 overlapping orders in the strategy
SellHigh:
- SellHigh.MinPrice = 1500*(101%) = 1515
- SellHigh.MaxPrice = 2000
BuyLow:
- BuyLow.MinPrice = 1500
- BuyLow.MaxPrice = 2000/(101%) = 1980.1980

Overlapping Budget Dynamics

The unique dynamics of the Overlapping strategy necessitate adjustments to the budgets relative to each other. Because it's engineered to maintain a consistent spread across all price points and move in unison on a single bonding curve, specifying the sell budget requires calculating the buy budget based on the strategy details.

However, if the indicated strategy price range is positioned outside (either above or below) the current market price, the strategy would only necessitate depositing one budget for two primary reasons:

1. To prevent an immediate arbitrage opportunity that could deplete the available budget at a discounted rate.

2. To uphold the strategy's dynamics where the buy and sell orders are interconnected, so when one side is executed, the other is filled.