1.What is Futures Trading?
Different from crypto currency trading and margin trading, the futures trading offered by our platform is derived from traditional futures trading. The underlying asset of derivatives is not actual crypto or fiat currency but an agreement, in most cases, that stipulates a specified time and a predetermined price and a specific amount in the future to buy or sell a commodity, , currency or other products which can be settled with cash or physical delivery.
To put it simply, futures trading is an agreement signed with an exchange to buy or sell a commodity at a specified time in the future.
Platform will settle the agreements with different commodities at maturity according to the specified underlying asset. For example, I’ll receive BTC when the agreements expires if the underlying asset is BTC.
2. What is a Perpetual Futures ?
There has two kinds of futures trading:Futures and Perpetual Futures
Specific differences are as follows:
Perpetual Futures | Futures |
No expiry date won't delivery |
have expiry date Delivery is generally carried out weekly/monthly/ quarterly etc |
The perpetual futures are settled 3times a day under normal circumstances with a period of 8hours |
The futures will be settled every friday and the delivery period is 7days |
There is no trading time limit for perpetual futures, you can open and close at any time | The futures can only close the positon 10mins before the delivery, and cannot open the position |
3.What is "Funding Fee" and "Reference Index Price"?
As we know, Perpetual Futures funding fee is a margin-based spot market and hence trade close to the underlying reference Index Price
Which means Perpetual futures market price≠Spot market price
So, in order to balance the perpetual market price and spot market price, we need "Funding" and "Reference Index Price" as a mechanics of the market .
1)Reference Index Price
Reference Index Price as a primary index of forced liquidation, which determines your Unrealised PNL and liquidation price. It is calculated by average several mainstream exchange platforms‘ Perpetual market prices.So that we can better protect your Digital Assets.
For example,If the perpetual contract market price suddenly violent fluctuations, the system will not force liqudation your positions.
The liquidation price only depends on the "Reference Index Price"
2)Funding
The primary mechanism to tether to spot price is Funding.
Periodic payments exchanged between the buyer and seller every 8 hours. If the rate is positive, then longs will pay and shorts will receive the rate, and vice versa if the rate is negative.
Funding occurs every 8 hours at 04:00 UTC, 12:00 UTC and 20:00 UTC. You will only pay or receive funding if you hold a position at one of these times. If you close your position prior to the funding exchange then you will not pay or receive funding.
3.How to do Futures Trading?
Trough the previous contents, we've learned that futures are different from spot transactions.the subject matter of transaction is not the currencies but the agreement.
Here is the detail Specifications:
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