Digital currency futures contract is a kind of digital asset derivative product, which contains the agreed information of digital asset transaction, such as transaction type, transaction time, price, quantity, etc. …
1. What is a digital currency futures contract
Digital currency futures contract is a kind of digital asset derivative product, which contains the agreed information of digital asset transaction, such as transaction type, transaction time, price, quantity, etc.
Digital currency contract trading refers to the act of buying and selling standardized contracts on exchanges when the two parties agree to use digital assets as the target at a certain time in the future. Investors in the currency circle can make profits through contract transactions such as arbitrage, hedging, and speculation.
2. Types of digital currency contracts
Digital currency contracts include two types: fixed-term contracts (current week, next week, quarter) and perpetual contracts.
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Delivery date: usually every Friday at 4 pm.
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Day settlement contract: A contract that is delivered at 4 pm on the Friday closest to the trading day.
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Next week contract: A contract that is delivered at 4 pm on the second Friday closest to the trading day.
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Quarterly contract: refers to a contract that is delivered before 4 pm on the last Friday of the nearest month in March, June, September, and December. And it does not coincide with the delivery date of the current week and next week.
The contract is automatically closed at 4 pm on the day of the delivery period, and the contract can only be closed in the last 10 minutes before delivery, not open.
Perpetual contracts will not automatically expire and deliver, and positions can be closed at any time, real-time settlement of income. Perpetual contracts have more advantages than fixed-term contracts. At present, most mainstream contract exchanges have launched or will soon launch perpetual contract trading.
Third, use the plan to entrust timely stop-profit and stop-loss
Planned order refers to the pre-set price and quantity trigger conditions. When the latest transaction price in the market reaches the trigger condition, the system will place orders at the pre-set price and quantity (ie limit price). Applies to stop-profit and stop-loss.
Parameter Description:
Trigger price: When the latest transaction price reaches the set trigger price, the order is triggered and the order is placed.
Agency price: the buying price and selling price. When the latest price reaches the trigger price, the system will automatically place an order.
Quantitative: the "order quantity" after the triggering of the order by the planning committee.
Example:
A user holds a multi-position position of 100 BTC quarterly contracts, and the average position price is 10,000 US dollars. He believes that 9900 US dollars is an important support point. If the price breaks through this support, there is a great possibility that it will fall Yes, in order to avoid larger losses, you need to close the position at $9,890 for a stop loss.
4. Margin System
When conducting contract transactions, users need to freeze a certain percentage of assets based on the total contract amount before completing the transaction. This certain percentage of assets is the initial margin.
In trading, different leverages require different initial margins.
The leverage of 1 times, 5 times, 10 times, 20 times, and 100 times corresponds to the initial margin of 100%, 20%, 10%, 5%, and 1% respectively.
In the full position mode, after the user opens a position, the risk and return of all positions in the contract account will be combined and the margin required for the position will change with the latest transaction price.
In the position-by-position mode, the two-way position of each contract will calculate its margin and income independently. Only when the amount of margin available for opening a position is greater than or equal to the amount of margin required for opening a position, the user can commission.
5. Maintenance of margin ratio
Maintain the margin level and determine the liquidation line of the contract.
Under the warehouse-by-stake model, the current margin rate of mainstream perpetual contract exchanges is at least 0.5%:
The liquidation line with leverage of 100 times is about -50%
The liquidation line with a leverage of 50 times is approximately ﹣75%
The liquidation line with 20 times leverage is approximately ﹣90%
The liquidation line of ten times leverage is about ﹣95%
If the margin ratio of an exchange is 0.5%, then when the Bitcoin price is $10,000, you can use 100 times leverage, then your liquidation line is $9,950 instead of $9,900.