TABLE OF CONTENTS
Trading
Trading futures contracts can be rewarding, as they are useful in leveraging speculative positions or hedging against losses elsewhere. To start trading futures in the HitBTC Mobile App is very easy.
You can find detailed instructions in this article.
1. Go to the trade screen and select the futures tab.
2. Pick a contract (for example BTC/USDT)
3. Transfer USDT to the Derivatives account.
The following data is calculated by the system:
- Position – the desired currency amount to sell or buy (from the Amount field).
- Buying power – the currency amount available for spending.
- In orders – the currency amount reserved for the current orders.
- Best bid/ask – the best price for this side in the Market Depth.
- Liq. Price – liquidation price. When the currency pair price on the market reaches this value, the contract will be automatically liquidated (see the Liquidation paragraph below).
- If the futures contract price will be lower than Liq. Price, the part of the margin collateral will be used to cover losses.
The following data is selected by the user:
- Amount – the desired currency amount to sell or buy.
- Price – the price for the trade.
- %% indicator – enables to set the position volume as a percentage of Buying Power.
- Total – the desired currency amount to receive or spend in the trade.
4. Add assets Margin.
5. Set the Leverage.
The contract has the following fields:
- Contracts – the main data (currency pair, leverage, Long/Short).
- Position Size – the contract size in a currency that the user wants to buy or sell.
- Entry price – the relevant currency pair volume-weighted average price in the futures market at the time of the contract's creation.
- Price – liquidation price. When the currency pair price on the market reaches this value, the contract will be automatically liquidated (see the Liquidation paragraph below).
If the futures contract price turns out to be lower than the Liq. Price, the part of the margin collateral will be used to cover the losses. - Risk – an index that shows how close the position is to liquidation. The greater the selected leverage, the less price movement would need to happen in an unfavorable (for the trader) direction for the liquidation to occur
- Unr. PnL (Unreleased Profit and Loss) – a profit or loss that trader receives or incurs if he or she closes the contract by the current mark price by clicking the Close button.
- PnL (Profit and Loss) – a real profit or loss by this contract when the contract was partially executed.
PnL = (Trade Price – Entry Price) * Quantity - Margin – a margin collateral for this position.
6. Place your order.
7. Check your orders and position on the Orders screen.
8. Done! You have started trading futures.
OHLCV chart features
OHCLV chart has the information indicators:
- Mark price – the price on the basis of which the decision to liquidate the position is made: the mark price is compared with the liquidation price.
The mark price is calculated based on the index price using the formula below.
Mark Price = Index Price + BfairBfair– "fair basis".
Bfair = Index Price * Funding Rate * (t/T)
t — the time remaining until the next funding period,
T — funding interval (8 hours)
- Index – index price of the selected currency pair. It is calculated based on the data from several other exchange platforms.
- 24 High/24 Low – max/min prices during the period.
- Funding Rate – the rate for the funding calculation. The detailed calculation is noted above in the Perpetual futures operation principles
- Countdown – the funding counter. When the value drops to zero, payments or deductions of funding will be made, and the counter will restart.
- Open int (Open interest) – the total currency volume in opened contracts on the market.
Liquidation
If the currency pair price on the market (Mark Price) will be the same as Liq. Price for a certain contract, this contract will be liquidated.
An attempt will be made to close the contract at the current market price:
- Part of the margin collateral will be used to cover the loss.
- If there is a surplus of the margin collateral, it will be returned to the user.
- If the loss cannot be covered by margin collateral, the position will be given to Insurance Fund (internal platform mechanism).
- If the Insurance Fund is unable to process the position, the ADL mechanism can be applied to the opposite market side.
The liquidation mechanism also takes potential funding and penalties into account. So, if the Funding Rate has increased, and a high Leverage is used, when the user does not have enough collateral to deduct funding, the position can also be liquidated. Upon liquidation, a certain amount of penalty is debited from the user (0.3% of the position volume).
To avoid liquidation, the user can either close the contract before the liquidation occurs or increase the margin collateral for this contract