Your questions answered

Understanding Crypto Futures

Crypto futures are derivative contracts that allow traders to speculate on the future price movements of cryptocurrencies without owning the underlying assets.

Contract Types

Familiarize yourself with perpetual contracts, a type of crypto futures without an expiration date. Perpetual contracts mimic spot market movements and are popular for their flexibility.

Leverage and Margin

Utilize leverage cautiously. While it amplifies potential profits, it also increases the risk of significant losses. Understand margin requirements and manage risk through position sizing.

Market Analysis

Conduct thorough technical and fundamental analysis. Consider factors such as market trends, news, and macroeconomic indicators influencing the crypto market.

Risk Management

Set stop-loss orders to limit potential losses. Diversify your crypto portfolio and avoid over-leveraging to minimize risk exposure.

Liquidity Considerations

Choose liquid trading pairs to ensure smoother execution of trades. Illiquid markets can result in slippage and difficulty closing positions.

Continuous Monitoring

Cryptocurrency markets operate 24/7. Stay vigilant, monitor real-time market data, and be aware of global events affecting the crypto space.

Technical Skills

Develop a basic understanding of technical indicators, chart patterns, and order types commonly used in crypto futures trading.

Fees and Funding Rates

Obtain knowledge related to trading fees and funding rates. Understand how funding rates work in perpetual contracts, as they impact long and short positions.

Understanding Leverage

Leverage in crypto futures trading allows traders to control a larger position size with a smaller amount of capital. It magnifies both potential profits and losses. For example, with 10x leverage, a trader can control $10,000 worth of crypto with just $1,000.

Key Points on Leverage

Amplified Returns: Leverage allows traders to potentially earn higher returns on their investment than if they traded with their own capital only.

Increased Risk: While leverage enhances profit potential, it also increases the risk of significant losses. Even small price movements can have a substantial impact on a leveraged position.

Understanding Margin

Margin is the amount of money that a trader needs to deposit to open and maintain a leveraged position. It is a percentage of the total position size. If the margin requirement for a 10x leveraged position is 10%, the trader needs to deposit $1,000 to control a $10,000 position.

Key Points on Margin

Initial Margin: The amount required to open a position. It ensures that traders have sufficient funds to cover potential losses.

Maintenance Margin: The minimum amount needed to keep a position open. If losses reduce the account balance below this level, a margin call may occur.

Risk Management with Leverage and Margin

Set Stop-Loss Orders: Define the maximum acceptable loss for a trade and set stop-loss orders to automatically exit a position if the market moves unfavorably.

Diversify and Manage Position Size: Avoid over-leveraging by diversifying your trades and only using a small percentage of your capital for each position.

Understand Liquidation Levels: Be aware of the liquidation price, where your position is automatically closed to prevent further losses.

Cautionary Considerations

Volatility Impact: Cryptocurrency markets are inherently volatile. While leverage offers opportunities, it also exposes traders to rapid and unpredictable price swings.

Educational Prerequisite: Before using leverage, thoroughly understand its implications. Lack of knowledge can lead to significant financial losses.

Conclusion

Leverage and margin are powerful tools in crypto futures trading, offering the potential for increased profits but also carrying higher risks. Successful trading requires a balanced approach, thorough risk management, and a deep understanding of market dynamics.

Introduction

In crypto futures trading, margin modes determine how leverage and margin are applied to your positions. Understanding different margin modes is crucial for effective risk management and optimizing trading strategies.

Cross Margin

Definition: Cross margin considers the entire account balance to support all open positions. Profits and losses from one position can offset those from another, reducing the risk of liquidation.

Advantages:

Risk Mitigation: Positions share the total account equity, minimizing the risk of liquidation due to a single losing trade.

Flexibility: Traders can allocate more capital to high-conviction trades without increasing the risk of liquidation.

Considerations:

Account-Wide Risk: Losses in one position may impact the margin available for other positions.

Isolated Margin

Definition: Isolated margin assigns a specific amount of margin to each open position. Losses in one position do not affect the margin and liquidation of other positions.

Advantages:

Position-Specific Risk: Protects individual positions from the impact of losses in other trades.

Control: Provides precise control over the risk associated with each position.

Considerations:

Higher Liquidation Risk: If a position moves unfavorably, only the isolated margin for that position is at risk.

Risk Limit

Definition: Risk limit allows traders to set a predefined maximum loss for a position. If this limit is reached, the position is automatically closed.

Advantages:

Strict Risk Management: Enables traders to cap potential losses at a predetermined level.

Customization: Tailor risk limits to individual risk tolerance and trading strategies.

Considerations

Continuous monitoring regularly reassess and adjust risk limits based on market conditions.

Conclusion

Choosing the appropriate margin mode is a critical decision in crypto futures trading. Traders must consider their risk tolerance, market conditions, and trading strategy. Whether opting for cross margin, isolated margin, or implementing risk limits, a well-informed approach is essential for successful and sustainable trading.

Market Order

Definition: A market order is an instruction to buy or sell an asset immediately at the current market price. It ensures swift execution but doesn't guarantee a specific price.

Use Case:

Urgent Trades: Ideal for situations where speed of execution is prioritized over price precision.

Limit Order

Definition: A limit order allows traders to set a specific price at which they want to buy or sell an asset. It only executes at the designated price or better.

Use Case:

Price Precision: Useful for entering or exiting positions at predetermined price levels.

Stop Order

Definition: A stop order becomes a market order when the asset reaches a specified price (the stop price). It is designed to limit losses or capture profits at a certain point.

Use Case:

Risk Management: Helps mitigate losses by triggering an exit when the market moves against the position.

Take Profit Order

Definition: A take profit order is a limit order placed to automatically close a position when a specified profit level is reached. It locks in gains and exits the trade.

Use Case:

Profit Protection: Allows traders to secure profits without constant monitoring of the market.

Trailing Stop Order

Definition: A trailing stop order adjusts the stop price dynamically, trailing the market price at a specified distance. It follows price movements to protect profits.

Use Case:

Riding Trends: Useful in trending markets to capture maximum profit while protecting gains.

OCO (One Cancels the Other) Order

Definition: An OCO order combines a limit order with a stop order. If one order is executed, the other is automatically canceled.

Use Case:

Contingency Planning: Useful for simultaneously setting profit-taking and stop-loss levels.

Conclusion

Understanding and strategically using different types of orders is essential for effective risk management and trade execution in crypto futures trading. Traders should tailor their order types to specific market conditions, risk tolerance, and overall trading strategies.

Long Position

Definition: A long position is taken when a trader expects the price of the cryptocurrency to rise. It involves buying a futures contract with the intention of selling it at a higher price in the future.

Profit and Loss: Profits are realized if the market price increases, and losses occur if the price decreases.

Short Position

Definition: A short position is established when a trader anticipates a decline in the cryptocurrency's price. It involves selling a futures contract with the intention of buying it back at a lower price in the future.

Profit and Loss: Profits are earned if the market price falls, while losses occur if the price rises.

Opening and Closing Positions

Opening a Position: Initiating a long or short position by buying or selling a futures contract.

Closing a Position: Exiting a previously opened position by selling (for long positions) or buying (for short positions) the corresponding futures contract.

Unrealized and Realized P&L

Unrealized Profit and Loss (P&L): The paper profit or loss on an open position, based on the current market price.

Realized Profit and Loss: The actual profit or loss incurred when a position is closed.

Position Sizing

Definition: Determining the quantity of contracts to trade based on risk tolerance, account size, and market conditions.

Risk Management: Proper position sizing helps control the potential impact of losses on the trading account.

Leverage Impact

Increased Exposure: Leverage allows traders to control larger positions with a smaller amount of capital, amplifying both potential profits and losses.

Risk Consideration: Higher leverage increases risk, emphasizing the need for careful risk management.

Margin Maintenance

Definition: The minimum amount of funds required to keep a position open. Falling below this level may trigger liquidation.

Margin Call: A notification to deposit more funds when the account balance approaches the maintenance margin.

Hedging Positions

Definition: Using futures contracts to offset the risk in an existing portfolio. For example, a crypto miner might hedge against price declines by taking a short position.

Risk Mitigation: Hedging helps protect against adverse price movements.

Net Long and Net Short

Net Long Position

Definition: The total quantity of long positions exceeds the total quantity of short positions in a trading account.

Market Expectation: The trader anticipates an overall increase in the market.

Net Short Position

Definition: The total quantity of short positions exceeds the total quantity of long positions.

Market Expectation: The trader expects an overall decrease in the market.

Delta-Neutral Position

Definition: Achieved by combining long and short positions to offset the directional risk. The net delta is near zero.

Use Case: Traders may adopt a delta-neutral strategy to profit from volatility or reduce directional exposure.

Long/Short Ratio

Definition: The ratio of long positions to short positions or vice versa in a trader's portfolio.

Sentiment Analysis: A high long/short ratio may indicate bullish sentiment, while a low ratio may suggest bearish sentiment.

All-In and All-Out

All-In Position

Definition: A trader invests their entire available capital in a single position.

Risk Consideration: High potential for significant gains or losses.

All-Out Position

Definition: The trader exits all existing positions, holding no open contracts.

Strategy Shift: Indicates a shift in the trader's overall market outlook or a desire to reevaluate positions.

Pyramid Trading

Definition: Gradually increasing or decreasing the size of a position in response to favorable or unfavorable price movements.

Risk Management: Allows traders to add to winning positions and cut back on losing ones.

Dollar-Cost Averaging (DCA)

Definition: Regularly investing a fixed amount in a specific asset, regardless of its price.

Use Case: Reduces the impact of short-term market volatility and allows for a more disciplined approach to investing.

Scaling In and Scaling Out

Scaling In:

Definition: Gradually opening new positions as the market moves in the desired direction.

Risk Management: Reduces the risk of entering a full position in an unfavorable market.

Scaling Out

Definition: Gradually closing portions of an existing position to secure profits.

Profit Protection: Allows traders to lock in gains while keeping a portion of the position open for potential further profits.

Conclusion

Selecting and managing position modes is a crucial aspect of effective crypto futures trading. Traders should align their position modes with their market outlook, risk tolerance, and overall trading strategy. Regularly reassessing and adjusting positions based on market conditions is key to successful trading.

Definition

Position Liquidation: The process of closing a trader's open positions in the market, typically triggered by adverse price movements or insufficient margin levels.

Causes of Position Liquidation

Adverse Price Movements: If the market moves against a trader's position, reaching a critical point, the position may be liquidated to minimize losses.

Insufficient Margin: If the trader's account balance falls below the maintenance margin level, a liquidation event may occur.

Margin Call

Definition: A notification from the broker to deposit additional funds when the account balance approaches the maintenance margin.

Purpose: To prevent the account from falling into negative territory and to maintain the open positions.

Types of Liquidation

Market Liquidation: The position is closed at the current market price, which may differ from the intended exit price.

Limit Liquidation: The position is closed at a specific price set by the trader, if possible. However, it may not guarantee execution in volatile markets.

Strategies to Avoid Liquidation

Risk Management: Set stop-loss orders to limit potential losses and regularly review position sizes in relation to available margin.

Diversification: Avoid over-concentration in a single asset or position to reduce the impact of adverse price movements.

Continuous Monitoring

Real-Time Monitoring: Stay vigilant and monitor the market, especially during periods of heightened volatility or major economic events.

Conclusion

Position liquidation is a critical aspect of risk management in crypto futures trading. Traders must be proactive in managing their positions, set appropriate risk controls, and stay informed about market conditions to avoid unexpected liquidation events.

Definition

Funding Fee: A recurring fee paid between traders in a perpetual futures contract to ensure that the contract price closely tracks the underlying asset's spot price.

Calculation of Funding Fee

Market Imbalance: The funding fee is determined by the difference between the perpetual contract price and the spot price.

Pay and Receive: Long positions may pay funding to short positions, or vice versa, depending on market conditions.

Purpose of Funding Fees

Maintaining Peg: Ensures that the perpetual contract's price aligns with the underlying spot market, preventing large deviations.

Incentive Alignment: Encourages traders to adjust their positions based on market conditions, promoting balance.

Funding Interval

Regular Payments: Funding fees are typically settled at fixed intervals, often every 8 hours.

Transparency: The predetermined schedule enhances market predictability.

Components of Funding Fees

Interest Rate: A variable interest rate component, reflecting market sentiment and demand for leverage.

Premium/Discount: An adjustment based on the difference between the contract price and the underlying asset's spot price.

Impact on Traders

Profit or Cost: Traders either pay or receive funding based on their position and market conditions.

Cost of Carry: Similar to the cost of carry in traditional finance, funding fees account for holding a position over time.

Funding Fee Strategies

Position Management: Traders may adjust positions before funding intervals to optimize costs or benefits.

Arbitrage Opportunities: Skilled traders may capitalize on pricing discrepancies between perpetual and spot markets.

Automatic Execution

Automated Process: Funding fees are automatically debited or credited to traders' accounts.

Transparency: The automated nature of funding fee settlements adds transparency to the process.

Considerations

Market Volatility: Funding fees can vary with market conditions, especially during periods of high volatility.

Platform Specifics: Different exchanges may have variations in how funding fees are calculated and applied.

Risk Management

Awareness: Traders should be aware of upcoming funding intervals and their potential impact on positions.

Account Balances: Sufficient account balances are crucial to cover potential funding fee payments.

Conclusion

Understanding funding fees is essential for crypto futures traders, as they play a crucial role in maintaining the stability of perpetual contracts. Traders should factor these fees into their strategies and risk management practices.

Trading fee

Our trading fees are simple and flat:

Makers and takers

Maker order is the limit order which enters into the order book before it can be traded in market. For example, if the current BTC lowest ask price is 90,000 USDT and you create a maker order with a bid price 89,999 USDT, this order cannot be filled immediately. Then it will enter into the order book until someone fills it. After filled, you're required to pay the maker fee and taker will pay the taker fee (or vice versa). You need to pay the taker fee when your limit ask order is traded successfully.