1. What is Futures Trading?
Different from spot trading, futures trading is one of the derivatives. The two parties do not settle the transaction immediately, but pay a certain amount of margin and agree to settle the transaction at a future date. In afutures transaction, the subject matter of the transaction is not the actual digital currency, but an agreement for settlement on an agreed date. On the basis of inherits the characteristics of the futures transaction, the perpetualfutures further derivatives the trading rules, forming the digital currency market 7*24 hours never expire, and using thefundingfeeto guarantee the futures price to anchor the spot price such a new type offutures trading.
2. What is Perpetual Futures?
Perpetual futures has three characteristics:
A. Never expire,
B. Spot prices are anchored through a "fundingfeemechanism",
C. Use "markprice" to calculate profit and loss,
3. What is Isolated Margin Mode?
Isolated Margin Modeassigned to a position is restricted to a certain amount.Closing positions if losses occur, it only deductfrom the funds allocated to positions and will not affect the position of the margin contained in the funds. If forced liquidation occurs, the maximum amount of loss is only the margin amount in the position. Users can add and remove Margin to manage risk of position at will under this mode.
ZBfuturessupports Isolated Margin tradingcurrently. Corresponding to Isolated Margin,there is another margin mode,Cross Margin mode, will be launched in the future based on market feedback.
The CrossMarginMode refers to placing all the funds in the futures account as margin, if a loss occurs and the amount of the loss exceeds the margin of the position frozen at the opening position, the excess amount will be deducted from the futures account as the realized profit and loss.If a forced liquidation occurs, it means that allfunds of the account has been lost .
4. WhatisHedgePositions and one-way positions？
Hedge positions: Hedge position is that the users can hold a long and a short position at the same time in the same trading pair market. There are independent opening and closing operations.Open long or close short when buying,while open short or close when sell.
One-way positions: In one-way mode, you can only hold positions in one direction under one futures.For example, if you open a short position and anticipate that the price will go down in the longer timeframe, but in the meanwhile, you also want to open a long position for a shorter time frame, you won’t be able to open positions in both directions at the same time. Opening positions in both directions would result in canceling one another out.
ZB futuresonly support hedge positions modecurrently .
5. What are FundingFee?
Fundingfee isa mechanism to prevent the futures price from deviating too much from the spot price, because the perpetual futures does not have a delivery date, while the traditional futures has a delivery date. At the time of settlement, all exposure positions expire, and the delivery futures price and spot price are basically anchored on the delivery date. However, holders of perpetual futures can hold positions permanently. In order to prevent the trend of the futures price from forming a large deviation from the spot price, the two sides of long and short can exchange the payment of fundingfee to achieve anchoring.
When the market trend is bullish and the fee is positive, the bullswill pay the fee to the bears. In contrast, when the market is bearish, the fee rate is negative, and the short trader is paying a fee tothe long.
6. What is Mark Price?
Mark price is a mechanism to avoid frequent forced liquidation of positions due to abnormal futures prices. It is determined by market liquidity.
Markprice = Index price * (1+ funding rate * the remaininghours before the next funding fee /8)
7. What is a Margin?
In the contract trading market, users only need to pay a certain amount of money to guarantee, the guarantee fund is called margin, to buy long or sell short.Margin ofthe isolated margin trading mode iscalculated for return and risk respectively.
8. What is aInsurance Fund?
The profit and loss of users' positions will change with the drastic fluctuations of the digital currency market. When the market mark price fluctuations trigger the forced liquidation of users' positions,forced liquidation system will take over the position at the bankruptcy price and liquidate.andThe processed forced liquidationsurplus will be injected into a capitalpool. The capital in the pool is mainly used to deal with the losses caused by forced liquidation of positions, which are covered and deducted by the capital in the pool. This capital pool is insurance fund.
9. What is a Leverage Multiple?
When a user trades a perpetual futures, he/she has paid a margin, and according to the risk calculation rules of the platform, there will be the maximum open position size corresponding to the margin amount, that is, the total amount after the leverage multiple of the fund is enlarged. The maximum leverage multiple of 125 times is supported by ZB perpetual futures. Eligible users with 100USDT can trade long or short positions with a nominal value of 12,500 USDT.
10. How to calculate Profit and Loss(PNL)?
There are two types of profit and loss: unrealized profit and loss(PNL)and, realized profit and loss(PNL).
Unrealized profit and loss refers to the floating profit and loss caused by price changes of a holding position before liquidating the position. This part of unrealized profit and loss is not available before liquidating the position.
Unrealized profit and loss calculation method:
Long positions unrealized profit and loss = (the latest markprice - opening price) * Position number
Short position unrealized profit and loss = (position opening price - thelatest mark price) * Position number
Already realized profit and loss is the amount of actual margin profit and loss that produces after closing a position, deducted commission, can transfer and be used at opening a position again.
Calculation method:
Long position realized profit and loss = (actual closing price - opening price) * Position number - commission fee
Realized profit and loss of short position = (position opening price - actual position closing price) * Position number - commission fee
* Realized profit and loss is the increase or decrease generated on the basis of margin. The calculation of funds after the liquidation of positions, that is, the actual amount returned to the account is equal to the margin of positions + realized profit and loss.
11. What isForcedLiquidation?
The basis of perpetual trading is the use of margin trading. In order tohold a position, the trader must have a minimum amount of margin. If the market fluctuated so violently that the margin level falls below the minimum, the position is forced to close and the margin is lost.
12. What are the Risks of FuturesTrading?
Using leverage to trade digital currencies is complex and risky. You may incur significant profits or losses when trading futures, so you need to be prepared before you start trading. Small price fluctuations can have a big impact on your trade. It is possible that the balance in your futures account will liquidatedeven in the event of small price fluctuations.