Activate Futures Trading
- 1. Introduction to OKEx Futures
- OKEx Futures is a crypto asset derivative product that is settled in crypto assets such as Bitcoin (BTC) and USDT, etc. Each contract has a Face Value of a certain amount of BTC or underlying assets (e.g. LTC, ETH, 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 risks by hedging.
- In futures trading, traders only need to pay a small amount of margin according to the ratio of the contract position value to trade higher-value contracts. Traders can therefore make use of different tools to increase their profit, which also involves greater risks.
|Token-margined Futures||USDT-margined Futures|
|Underlying||BTC (or other assets, e.g. LTC)/USD Index||BTC (or other assets, e.g. LTC)/USDT Index|
|Contract value||BTC: USD100; other assets, e.g. LTC: USD10||BTC: 0.0001 BTC; ETH: 0.001 ETH; XRP: 1 XRP, etc.|
|Quotation unit||Index point|
|Expiration type||Weekly, bi-weekly, quarterly|
|Minimum margin||Tiered Maintenance Margin Ratio System, depending on the number of contracts|
|Contract delivery time||09:00, Friday of the expiry week (CET, UTC+1)|
|Settlement date||Same as delivery date|
|Settlement method||Settled by token|
- 2. Futures Margin
- Futures margin is a good-faith deposit, or an amount of capital that one needs to deposit to open a futures contract.
- There are 2 margin modes available on OKEx: cross-margin and fixed-margin. In cross-margin mode, the position margin required varies with the price movements. In fixed-margin mode, the position margin remains the same even if the price fluctuates.
- 3. Definitions of Index Price and Contract's Last Traded Price
- USD or USDT index price is a token’s reasonable market price calculated by the USD or USDT price of multiple exchanges on the market. Contract’s last traded price is the trading price in the contract market. Usually the contract traded price will fluctuate around the index price with a certain price spread. The weekly, bi-weekly, and quarterly price might differ from the index price. However, because of the settlement mechanism, contract price will gradually come close to the index price.
- 4. Definition of Realized Profit and Loss (RPL), Unrealized Profit and Loss (UPL) and Profit
- Realized profit and loss (RPL): the profit/loss generated by closing a position before delivery or settlement.
- Unrealized profit and loss (UPL): the profit/loss generated by a position that has yet to be closed. All UPL will be settled and credited to user balance every day at 09:00 (CET UTC+1). The UPL will then be reset.
- Profit: the sum of user’s settled profit and UPL since opening the position.
- 5. Margin Ratio and Maintenance Margin Ratio
- Margin ratio calculation:
- Fixed-Margin Mode: Margin Ratio = (Fixed Margin + UPL) / Position Value
- Cross-Margin Mode: Margin Ratio = (Balance + RPL + UPL) / (Position Value + Order Margin * Leverage). Order margin is the margin that is on hold for pending orders.
- Of which Position Value = Face Value * Number of Contracts / Last Mark Price
- Maintenance Margin Ratio:
- Maintenance margin ratio is the lowest required margin ratio for maintaining the current open position. In order to minimize risks and enhance user’s trading experience, we have launched the tiered maintenance margin ratio system. The larger the positions held, the higher the maintenance margin ratio is required, and the lower the leverage is available.
- 6. When is liquidation triggered?
- When margin ratio ≤ maintenance margin ratio + close position fee, liquidation will be triggered.
- This is introduced to avoid cascade liquidation and clawback caused by volatility in the crypto market.
- 7. Why the profit cannot be transferred out immediately after position is closed?
- When contracts are settled every day at 09:00 (CET, UTC+1), we will calculate the system loss of the weekly, bi-weekly, and quarterly contracts that are not liquidated. After that, profits can be transferred out.
- 8. Why is the UPL reset to 0 after settlement?
- In order to allow for the transfer of UPL of the bi-weekly, and quarterly contract before a position is closed, the system will transfer this week’s UPL to user’s account equity (cross-margin mode) / fixed margin (fixed-margin mode), and credit the relevant amount from this settlement to the RPL every day at 09:00 (CET, UTC+1). When the settlement is complete, the UPL will be reset and calculated according to the new settlement price.
1. In futures trading, the ( ) the margin ratio, and the ( ) the leverage and the higher the risk.
2. Liquidation is triggered when a user loses all his margin.
3. Why is liquidation triggered before margin is all lost?
4. When can the profit be transferred out after a position is closed?
5. Is it true that due to the volatility in the crypto asset market, investors should fully understand the potential risks and unconditionally accept the outcome in crypto asset trading, including the losses generated from high leverage and factors which are out of OKEx’s control (e.g. network latency and computer system failure).
Congratulations, you have passed the quiz, you may now activate the derivatives trading.