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Academy Beginners Tutorial Article

IV. USDT Delivery Contracts: Order Management

2020.02.25 何, 颖

1. How Do I Manage My Open Orders?

All open orders can be found under "Orders" page, and you can always cancel them before they are filled.

"Margin" only includes the margin needed for unfilled contract(s). While "Fee" only includes the fee charged for filled contract(s).

2. How to Open an Order?

a) Choose the token type,expiration type and order type:

token type: BTC, EOS, ETH, LTC, BCH, ETC, XRP, BSV, TRX

expiration type: weekly, bi-weekly, quarterly or bi-quarterly

order type: limit order, stop-limit order, advanced limit order, trail order, iceberg order, time-weighted average price order

b) Enter the price (USD) and quantity (contracts). System will calculate the available number of contracts for opening and the margin ratio after opening the

c) Choose the execution type (Open Long, Open Short, Close Long, Close Short) to submit the order.

d)If market anomalies occur before or during settlement and delivery, which results in wide fluctuation of futures index or abnormal clawback rate, we may early settle or postpone settlement depending on the situation. We will post a detailed announcement in such a situation.

Under cross-margin mode, with 10x leverage, an order can only be opened when the margin ratio is larger than or equal to 90%; for 20x leverage, an order can only be opened when the margin ratio is larger than or equal to 80%. Under fixed-margin mode, an order can only be opened when the available margin is larger than the margin required.

3. Trade Type

Open Long: Buy to open the position, you would profit if the price rises.

Close Long: Sell to close the position. Taking the opposing position from the long position which is no longer desirable.

Open Short: Sell to open the position, you would profit if the price falls.

Close Short: Buy to close the position. Taking the opposing position from the short position which is no longer desirable.

4. Order Type

Limit Order

Limit order is an order that limits the maximum buying price of the buyer, and the minimum selling price of the seller. After your order is placed, our system will post it on the order book, and match it with the orders available - at the price you specified or better.

Margins are required to open a position, while the number of positions closable is reduced after placing close orders.

Case 1: If the current BTC weekly futures contract market price(latest deal price) is USDT13,000, and you wish to buy at USDT12,900. When the price drops to USDT12,900 or below, the pre-set order will be triggered and filled automatically.

On the contrary if you wish to buy at USDT13,100, under the rule of buying at a price more favorable to the buyer, your order will be triggered and filled at USDT13,000 immediately, instead of waiting the market price to rise to USDT13,100.

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Stop-Limit

Stop-limit is a set of instructions for placing a trade at predefined parameters. When the latest market price reaches the trigger price, the system will automatically place order according to the pre-set price and amount. If the pre-set order price triggers the price limit rules, the system will place an order according to the maximum or minimum price limit.

When the number of contracts available to open or close becomes 0, the user cannot post any stop-limit orders.

Case 1(stop-loss for close short): The user opens a BTC short position with an average entry price of USDT9,000. If the user wants to execute stop-loss when the market price rises to USDT10,000 and close the position at USDT10,010:

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Case 2 (stop-loss for close long): The user holds a BTC long position with an average entry price of USDT9,000. If the user wants to execute stop-loss when the market price falls to USDT8,000 and close the position at USDT7,990:

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Case 3: When the BTC market price breaks above USDT19,250 and the user believes that it will continue to rise, he can open a long position above the market price at USDT19,251:

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Case 4: When the BTC market price drops below USDT19,250 and the user believes that it will continue to fall, he can open a short position below the market price at USDT19,249:

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Trail order

Trail orders allow users to send a pre-set order to the market when a significant market swing takes place. When the latest market price reaches the maximum (or minimum) market price (1 ± user-defined callback rate) after a trail order is submitted, this triggers the order to be executed on the market.

Case 1: The current price of BTC is USDT19,000. A user believes the BTC market will go down but rebound on a certain price floor. When the user wishes to execute a buy order at the market price when the rebound rate exceeds the pre-set “callback rate”.

The user can place a trail order as follows:

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When the BTC market price falls from USDT19,000 and reaches the lowest point at USDT17,800, the market price (USDT17,800) < trigger price (USDT18,000), the order requirement is fulfilled. Later, when the price rebounds to USDT17,978, which means the callback rate is (17,978 – 17,800) / 17,800 = 1%, matching the callback rate condition, it will trigger this trail order to place an order at market price and buy according to the trail order amount.

A buy trail order will be placed when trigger price >= lowest price, and rebound rate >= callback rate.

A sell trail order will be placed when trigger price <= highest price, and rebound rate >= callback rate.

Iceberg Order

An iceberg order is an algorithmic order type allowing users to avoid place a large order while avoiding slippage. An iceberg order automatically breaks up a user´s large order into multiple smaller orders. These orders will be placed on the market according to the latest best bid and ask price as well as the parameters set by the user. When one of the smaller orders has completely filled, or the latest market price has deviated significantly from the price of the current order, a new order will be placed automatically.

Case 1: A user would like to buy BTC at 19,000 US dollars and does not want to increase the cost so he/she place an iceberg order:

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The system will automatically place an iceberg order. The amount of each order will be 80% - 100% of the single order average. The order price will be the latest buy price x (1-price variance). Once the order completely filled, a new order will be placed. When the last market price exceeds 2 x (order variance), the previous order would be cancelled and a new one will be placed.

When the amount traded equals the total order amount, the iceberg trade has been filled. When the last market price exceeds the highest buy price of 20,000 US Dollars, the iceberg order would be temporarily paused. After the price falls down to 20,000 US Dollars, the iceberg order would be resume.

Time-weighted average price (TWAP)

Time-weighted average price (TWAP) is the average price of an instrument over a specified time. TWAP is a strategy that will attempt to execute an order which trades in slices of order quantity at regular intervals of time as specified by users. The purpose of TWAP is to minimize the market impact on basket orders.

Parameters of TWAP:

Price Variance (%): Buy Order = Best Bid x (1 + Price Variance %). Sell Order = Best Ask x (1 – Price Variance %)

Sweep Ratio (%): Sliced order size as a percentage of an order. The sum of all sliced orders is equal to the total order quantity.

Total Amount: Total order size in terms of unit of underlying or number of contracts

Per Order Limit: Max Size per sliced order in terms of unit of underlying or number of contracts

Price Limit: Max/Min price for each sliced order

Time Interval: Time in seconds between order placement

Case 1: User would like to go long 1,000 contracts and places a TWAP order.

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Assuming the order book is as follows:

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Assuming the user sets the Price Variance at 1%, the Max Buy Limit Price is thus set at $10,029.99 x (1 + 1.00%) = $10,310.29. System would then compute the current aggregated sell quantities posted in the order in which the price is lower than mentioned $10,310.29(aka 570+1+200+1+1+1+1=775). Subsequently the system would take a reference on user-defined sweep ratio so to determine the sliced order size, in this case, which is 38.75BTC (775x5%).

The sliced limit buy order would be posted at $10,310.29 for 38.75BTC.

All unfilled order quantities would not be posted as pending order but would be cancelled. Order would be resent according to user-defined time intervals with an updated price and quantities.

In case the sliced order price reaches the max/min price limit defined by the user, the order would be sent at the max/min price as defined. Said order would be automatically cancelled should there be no matched price in the market.

In case the sliced order quantity reaches the max/min order quantity defined by the user, the order would be sent at the user-defined quantity accordingly.

Advanced Limit Order

Advanced limit order offers 3 additional order options to a regular limit order, including “Post Only”, “Fill or Kill” and “Immediate or Cancel”. The regular limit order has been defaulted as “Good till Canceled”.

  1. Post Only: it never takes liquidity and makes sure the user will be a market maker. If your order would cause a match with a pre-existing order, your post-only limit order will be canceled.
  2. Fill or Kill: it makes sure the buy/sell order isfully executed or canceled entirely without partial fills.
  3. Immediate or Cancel: requires all or part of the order to be executed immediately, and any unfilled parts of the order are cancelled.

For example, if a user wishes to buy BTC and the order book is shown as the below screenshot:

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  1. If the user wishes to pay the maker fee, they can select the “Post Only” option under the Advanced Limit Order. If they have set the buy price as USD10,029.00, the order would not take liquidity as they are a market maker. If the buy price is USD10,030.00, the order will be executed with Buy (1). If the user is a market taker, the order will be canceled;
  2. If the user selected the “Fill or Kill” option, set the buy price as USD10,050.00 and the order amount is 800 BTC, as the total amount on the order book is only 775 BTC (570+1+200+1+1+1+1), the order amount is not fulfilled (800-775=25 BTC) and will be canceled entirely. But if the user only ordered 700 BTC, the order will be executed accordingly;
  3. If the user selected the “Immediate or Cancel” option, set the buy price as USD10,050.00 and the order amount is 800 BTC, as the total amount on the order book is only 775 BTC (570+1+200+1+1+1+1), 25 BTC (800-775) could not be filled, only 775 BTC of the order will be executed whilethe remaining order of 25 BTC is canceled as unfilled.

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