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Perpetual contract is an innovative financial derivative. Regarding trading rules, it is similar to the traditional futures contract, where investors don't need to hold the relevant asset, but can profit by predicting price movements and deciding whether to go long or short. The difference is that perpetual contracts have no expiration or settlement date and users can hold them for an extended period.
The futures contracts have a predetermined settlement date, which is much like commodity and Index futures in the traditional finance world. However, perpetual contracts have no settlement date allowing traders to hold positions for a more extended period to achieve greater returns on their investments.
TruBit Pro enables you to select BTC/ETH/USDT as the contract margin currency to trade all contracts across currencies. Profit and loss of your perpetual contracts will be settled with your margin currency. For example, you have ETH in a contract account, and you choose ETH margin to open an LTCUSDT position on perpetual contract. Any profit or loss of perpetual contract produced by the LTCUSDT position will be settled in ETH.
In the mechanism of perpetual contracts, the system will weigh comprehensive factors such as the long-short trend of the contracts traded on the market every 8 hours, and calculate the funding fee, which is exchanged between the Long and Short sides, thus ensuring that the trading price of the contract is always anchored to the spot market price. Compared with the case where futures contracts move abnormally due to premiums, the market price anchoring mechanism of perpetual contracts is very friendly to technical analysis traders.
TruBit Pro perpetual contract provides up to 125 times leverage, allowing traders to flexibly adjust leverages according to their risk tolerance after placing an order. The platform ensures the best trading experience for traders while providing flexible risk protection.
The Auto-Deleveraging system will sort traders' positions according to the higher profit percentage. More specifically, the system will reduce positions with higher profit percentages as priority. By doing this, our platform can protect the trader's benefit from significant losses caused by high-risk speculators.
In cross margin mode, the system settles the profit and loss of your positions and hedges other positions you hold in the same Settlement Coin.
For example, if the user chooses BTC as the Settlement Coin and holds the BTCUSDT, ETHUSDT and EOSUSDT contracts, the profit and loss of these three contracts can be hedged with each other and all settled in BTC.
Open the "Contract" menu to enter the contract trading interface. On the order panel, click the Leverage Multiplier and adjust leverage in the pop window.
Since Quanto Swap perpetual contract provides up to 125 times leverage, it may cause huge losses if users use highest leverage to implement the large positions. Therefore, TruBit Pro adopts Risk Limits to mitigate potential losses by liquidations.
Risk Limits depend on the principle of dynamic leverage, which means the high-volume you hold in position, the limit leverage you can apply, and you need to prepare extra initial margin for new positions, and the more initial margin is required for new positions. For more details about risk limits, please check Leverage and Risk Limits.
The settlement coin is the initial coin you choose as margin and for PnL settlement on the order panel. TruBit Pro will convert the initial token to contract token according to the spot exchange rate, and then conduct cross-currency contract operations.
Margin refers to the minimum required balance in the account for a leverage position for a leveraged position. Specifically, starting a position requires Initial Margin and Maintenance Margin to keep the position from getting liquidated. Depending on the trading strategy, TruBit Pro has implemented two different margin modes:
Customize Leverage for Isolated Margin:
Click on leverage and move the slider on Adjust Leverage window. The further slider you move to the right, the higher leverage you will get, and the less margin will be assigned to the position. Users need to pay attention that leverage changed will affect the actual liquidation price. Meanwhile, you can increase or reduce the margin for one position individually, and the liquidation price will change at the same time.
For example, if a user chooses BTC as margin and opens a position under cross margin mode, the assets in BTC account will be used as margin for this position. If the user has multiple positions under BTC account, any other position that has realized profit can contribute to increasing the margin on the loss position.
Additionally, under the cross margin mode, all contract positions will be closed when the liquidation is triggered.
In One-way Mode, users can only hold positions in one direction (buy or sell) under one contract.
In Hedge Mode, users can hold positions in both long and short directions simultaneously under the same contract to perform risk hedging.
Funding fee is an important mechanism to anchor the spot market price in perpetual contracts. Also, the funding fee is generated every 8 hours during trading period. You will only pay or receive funding fee if you hold a position at one of these times**.** If you close your position before the funding fee generated, you will not pay or receive funding fee. When the funding rate is positive, users who hold long positions need to pay the funding fee for other users who hold the short positions. Conversely, when the funding rate is negative, the short position holder needs to pay the funding fee for the long position holder.
Note that the value of your position is irrelevant to leverage. For example, if you hold a 100USDT BTCUSDT contract, funding will be charged/received at the notional value of position, not based on how much margin you have assigned to that position.
This rate ensures the contract trading price follows the spot market Index Price. The system will calculate Funding Rate by sampling the deviation, the price premium, between the contract price and spot market Index Price and update it every 1 hour.
MA: The general setting is 60, which means the system will use the average price premium in the last 60 minutes by default.
Adjustment Coefficient is introduced to reduce price premium distortion caused by the disparity of tick among different contracts. Currently, the adjustment coefficient on all contracts available in TruBit Pro is 1 by default. (TruBit Pro may proceed to change Adjustment Coefficient according to the actual situation of the contract without prior notice.)
Funding Rate range is [-0.375%,0.375] for contracts with 125x maximum leverage;
Funding Rate range is [-0.75%,0.75] for contracts with 50x maximum leverage.
TruBit Pro does not charge any funding fees; funding fees are exchanged between users who hold positions at the Timestamp.
The index price is calculated by referring to the spot price of several mainstream exchanges in the market, including Binance, Okex, Huobi, Coinbase, Kraken.
It should be noted that the reference exchanges may be removed from the system due to unpredictable and abnormal factors. For example, if an exchange is out of service and does not post any trades for more than 15 minutes, it will automatically get removed from the index until its trading resumes.
The mark price is calculated based on the sum of the moving average of the index price and the basis, which is mainly used for account PnL and liquidation calculations. (Notice: the forced liquidation is calculated based on the mark price, not the latest transaction price)
TruBit Pro sets a trading protection range for the order price in contract trading based on the index price, and the system rejects orders whose order price locates out of the price range. The upper limit of the price range is used to prevent overpriced buy orders and the lower limit of the price range is used to prevent underpriced sell orders.
In addition, in order to protect the stability of the system, the platform regularly reviews users' high-frequency and very low-holding time trading orders. If the average holding time of an account's orders is less than 5 minutes, and the trading volume of opening and closed positions is more than 80% of the total trading volume, we will consider illegal high-frequency arbitrage activities for those trading behaviors. The platform will suspend the withdrawal and deposit functions of the related profit in the account
In order to maintain a position, an investor must hold a certain percentage of the position value in margin, also known as the maintenance margin. If you are unable to fulfill the margin requirement, the forced liquidation will be triggered and you will lose your maintenance margin. The minimum maintenance margin requirements can be found on the "Leverage and Risk Limits" page.
TruBit Pro uses mark prices to avoid forced liquidation due to a lack of liquidity or market manipulation.
If TruBit Pro can activate the forced liquidation at a better price than a liquidation price, the additional money will be put into the insurance fund.
If TruBit Pro is unable to execute the forced liquidation at the liquidation price, then TruBit Pro will expend the insurance fund and attempt to close the position in the market. If the insurance fund is exhausted and TruBit Pro is still unable to execute the forced liquidation for all open orders, the Auto-Deleveraging system will be triggered.
Long: [1-(Margin+Additional Margin)1/(Contract SizeContract Multiplier)+Maintenance Margin Rate)*Opening Price
Short: [1+(Margin+Additional Margin)1/(Contract SizeContract Multiplier)-Maintenance Margin Rate)*Opening Price
Long: 1.0 / [(1.0 - Maintenance Margin Rate) / Opening Price + (Margin + Additional Margin) / (Contract Size * Exchange Rate)]
Short: 1.0 / [(1.0 + Maintenance Margin Rate) / Opening Price - (Margin + Additional Margin) / (Contract Size * Exchange Rate)]