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BitMart Futures Tutorial 04: Futures Knowledge and Function Introduction

[USDⓈ-M Futures and COIN-M Futures]

Quotation Unit: USDⓈ-M Futures is denominated in USDT while COIN-M Futures is denominated in USD.

PnL Calculating Currency: All types of USDⓈ-M Futures use USDT to calculate PNL while COIN-M Futures use its underlying asset. 

Margin Currency: All pairs of USDⓈ-M Futures use USDT as a margin. Users could trade various USDⓈ-M Futures with USDT. All COIN-M Futures use the underlying asset of each futures as a margin, therefore, users must hold the corresponding token to trade. For example, users must transfer BTC as a margin first to trade BTC/USD swaps.

Due to different margin currencies, the margin depreciation risk of USDⓈ-M Futures is distinguished from that of COIN-M Futures when token prices fall. To be more specific, the margin of COIN-M Futures will be affected by its underlying asset. However, the rise or fall of tokens’ prices won’t affect the value of USDT, so the margin of USDⓈ-M Futures won’t be influenced as well.

 

[Cross and Isolated]

Cross Margin Mode: All cross positions under the same margin asset share the same asset cross margin balance. In the event of liquidation, your asset's full margin balance along with any remaining open positions under the asset may be forfeited.

Isolated Margin Mode: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.

 

[One-Way and Hedge]

One-Way Mode

In One-way Mode, one contract can only hold one position in one direction.

Hedge Mode

In Hedge Mode, you can simultaneously hold positions in long and short directions under the same contract.

 

[Funding Fee]

BitMart Perpetual Swap uses a funding rate mechanism to anchor the market price to the spot price. The funding cost is the core operating mechanism of a perpetual swap.

Funding Fee Calculated Schedule: 0:00, 8:00, 16:00, The funding fee is calculated every 8 hours.

If the funding fee rate is positive, long positions will pay funding costs to short positions.

If the funding fee rate is negative, short positions will pay funding costs to long positions.

 

[Futures Trading Fee]

Futures Trading Fee = average price * trading size * futures fee fate

Example: When I completed 1 BTC Maker futures trade and the average price is 10,000 USDT, I need to pay futures fee: 1*10000*0.02%=2 USDT

If you are trading COIN-M futures, you will pay the trading fee based on the coin you are trading.

 

[Reasonable Price Marking]

BitMart adopts a uniquely designed reasonable price marking system to avoid unnecessarily forced liquidation of high-leverage products. Without this system, the marking price may deviate unnecessarily from the price index due to manipulated market or lack of liquidity, thus leading to unnecessarily forced liquidation. The system sets marking prices at a reasonable price instead of the latest trading price to avoid unnecessarily forced liquidation.

For a perpetual swap, its reasonable marking price is the index-based price with reference to the price of the global spot market plus the funding cost basis that decreases over time.

 

[Price Index]

The Price Index is a bulk of prices from the major Spot market exchanges, weighted by their relative volume. The Price Index for USDⓈ-M futures contracts derived prices from Huobi, Okex, Bittrex, HitBTC, Gate.io, Bitmax, Poloniex, and MXC. 

 

[Margin Ratio]

Margin Ratio = Margins / Margins Balance. The position will be liquidated when the margin ratio reaches 100%.

 

[Forced Liquidation]

At present, a perpetual swap supports leverage up to 100 times. To ensure the continuity of position, the trader must hold a margin of a certain proportion of position value, also known as the maintenance margin. When the position margin of the trader is lower than the maintenance margin, the trader’s position will be closed, and the maintenance margin will be lost at the same time. Such a process is known as forced liquidation, also known as close-out.

If the marked price of the futures reaches below the liquidation price (when long) or above (when short), your position will be liquidated.

>>Learn More

 

[Unrealised Profit and Loss]

Unrealised profit and loss are calculated at a reasonable price by default. It is the estimated profit and loss based on the market price when the position is closed. It does not represent the actual profit and loss when the position is closed.

 

[Realised PNL]

Realised PNL mainly includes upfront expenses and closed profit and loss. Fees will be deducted from the closed margin.

Realised PNL is the profit and loss of the position since it was opened. For example, I will pay a trading fee upon I open a position, then there will be Realised PNL after opening the position.

In addition, the profits and losses of the user are TP/SL, and capital expenses will be included in the Realised PNL.

 

[Profit Calculation]

  1. Long USDⓈ-M futures profit: (close price - open price) * contract size
  2. Short USDⓈ-M futures profit: (open price - close price) * contract size
  3. Long COIN-M futures profit: contract size / close price – contract size / open price
  4. Short COIN-M futures profit: contract size / close price – contract size / open price

 

Disclaimer: 

Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk. BitMart will do its best to list only high-quality coins but will not be responsible for your investment losses. 

 

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