Open Trading
Dear users, to ensure you truly understand the risks associated with contracts,please read the following rules to open trading.
Introduction to Perpetual Contract
Perpetual contract is a financial derivative similar to leveraged spot trading. It is settled in digital assets such as Bitcoin (BTC). Each contract has a Face Value of 1 USD-worth of BTC, etc. Traders can long or short a position to profit from the increase or decline of a digital asset's price or manage their investment by hedging.
In perpetual contract trading, traders only need to pay a small amount of margin proportionally to their holdings to trade higher-value contracts. Traders can therefore make use of different tools to increase their profit, which, however, involves greater risks.
Underlying: BTC/USD Index
Contract Multiplier: 1 USDT
Quotation Unit:: Index
Minimum Margin: A tiered maintenance margin ratio system is implemented according to the number of contracts held.
Expiry Date: There is no delivery date or expiry date in perpetual contract trading.
Settlement Time: Every 8 hours (04:00 ,12:00 and 20:00 SGP Time, UTC+8)
Features of Perpetual Contract
1. Expiry date: There is no delivery date or expiry date in perpetual contract trading.
2. Funding: As there is no expiry date, a "funding" mechanism is used to anchor the perpetual contract price to spot market price.
3. Settlement every 8 hours: Through the settlement every 8 hours at 04:00 ,12:00 and 20:00 every day (SGP Time, UTC+8), users’ UPL will be transferred to realized profit and loss (RPL), which allows better flexibility in fund usage.
How to calculate profit and loss?
1. Realized profit and loss (RPL)
the profit/loss generated by closing a position before delivery or settlement.
Long side: RPL = (Face value / average open price – face value / average closing price) * number of contracts closed
Short side: RPL = (Face value / average closing price – face value / average open price) * number of contracts closed
E.g. A user opened 1 BTC long positions at average open price 500 USD/BTC, then closed the position at 1000 USD/BTC. The RPL of contract will be = (1 / 500 - 1 / 1000) * 10000 = 0.1 BTC
E.g. A user opened 1 BTC short positions at average open price 500 USD/BTC, then closed the position at 1000 USD/BTC. The RPL of contract will be = (1 / 1000 - 1 / 500) * 10000 = - 0.1 BTC
2. Unrealized Profit and loss (UPL)
The profit/loss generated by a position that has yet to be closed.
Long side: UPL = (Face value / average open price – face value / latest contract price) * number of contracts to be closed
Short side: UPL = (Face value / latest contract price – face value / average open price) * number of contracts to be closed
E.g. A user opened 1 BTC long positions at average open price 500 USD/BTC, 2 hours later the latest contract price is 1000 USD/BTC. The UPL of the position will be = (1 / 500 - 1 / 1000) * 10000 = 0.1 BTC
E.g. A user opened 1 BTC short positions at average open price 500 USD/BTC, 2 hours later the latest contract price is 1000 USD/BTC. The UPL of the position will be = (1 / 1000 - 1 / 500) * 10000 = - 0.1 BTC
What are margin ratio and maintenance margin ratio (MMR)?
1. Margin ratio:
margin ratio = (fixed margin + UPL) / position value
Position value = face value * number of contracts / latest contract price
2. Maintenance margin ratio (MMR)
Maintenance Margin Ratio (MMR) is the lowest required margin ratio for a user to maintain the current open position(s). It is used to prevent large position from being liquidated, causing big impact on market liquidity. Basically, the larger the positions held, the higher MMR will be required, and the lower the leverage will be available.
What is ADL (Auto-Deleveraging)?
ADL will be triggered when the position margin ratio is not more than the MMR.
When will forced-liquidation be triggered?
An ADL system is introduced to avoid market impacts caused by liquidation of large positions and margin call losses. If the system has incurred a catastrophic liquidation, which the insurance fund cannot cover, the system will close out positions of clients who has higher effective leverages. The clients will be given full notice if such event happens.
When a user's maintenance margin ratio falls below the tier's required level, the contract position will be closed at its liquidation price and taken over by the forced liquidation engine. This is to avoid market impacts caused by cascade liquidation and margin call losses (losses caused by unfulfilled liquidated positions) under volatile market conditions.
What is funding?
The "funding" mechanism is used to anchor the perpetual contract price to spot market price.
Funding occurs every 8 hours, after the daily settlement at 04:00 ,12:00 and 20:00 (SGP Time). If you close your position prior to the funding time, then you will not pay or receive funding fee.
Funding = position value * funding rate (The funding rate is determined by the difference between contract price and spot index price between last and current settlement time)
When the funding rate is positive, longs pay shorts. When it is negative shorts pay longs. (The platform does not charge any fees in the funding process. Funding fees are exchanged directly between traders.)
What is underlying index?
Perpetual contract will be using underlying asset price for liquidation reference. This will reduce the frequency of liquidation as perpetual contract is a very risky and high-leverage product. By setting the underlying price as reference instead of the last trade price, this will serve users to their best interest.