Derivatives trading with Huobi Futures is highly leveraged and risky. In addition to the crypto investment risks we covered in an earlier lesson, crypto investors who trade in derivative products on Huobi Futures are exposed to effects such as leverage which magnifies both the risks and rewards of any price movement.
At Huobi Learn, we want you to make sure you understand the nature and rules of our derivative transactions, and decide whether to participate in Huobi Futures according to your own investment experience, objectives, financial status and risk-taking ability.
Derivative transactions of crypto assets are suitable only for those who can fully understand and assume responsibility for all the related risks. This includes professional investment institutions, experienced investors, and other qualified investor classes, depending on your local regulations.
If you have any doubts, please consult the law and get independent professional advice before applying for highly leveraged derivative transactions.
Extant Risks of Derivatives Trading
1. Price risks
As a special product with investment value affected by many factors, the price of digital assets can fluctuate greatly, which also translates into movements in the prices of derivatives. The price movements of derivatives are more difficult for investors to grasp, which adds to the potential for error. If this risk cannot be effectively controlled, an investor can suffer losses arising from their trading decisions.
2. Leverage risks
Investors need to understand that derivatives transactions are leveraged, which may lead to magnified profits or losses. This may lead to forcibly closed positions due to margin calls, or the need for additional capital to keep positions open.
3. Regulatory risks
Derivatives transactions of digital assets may face regulatory risks in certain jurisdictions. Investors need to be aware of the policy and regulatory environment in their relevant jurisdictions in order to avoid losses arising from regulatory decisions.
4. Other possible risks
High-leverage products, such as derivatives on Huobi Futures, expose the market to stability risks. Huobi Global carefully monitors the risks to market stability, and takes all necessary actions in response to market stability risks, including but not limited to communication, revealing risks, forced under-weightage, forced liquidation and so on, and will give our users written explanations for the actions taken in this regard.
The derivatives transaction rules of Huobi Futures, including but not limited to the adjustment coefficient, due date and product rules, can be modified according to the Huobi Global and Huobi Futures User Agreements.
If product rule changes need to be implemented, users must make all necessary adjustments to their trading positions and strategies. Huobi Global is obliged to notify users through an official website announcement or SMS notification, and users shall assume all possible losses or profits arising therefrom on their own.
Please read our Futures Risk Reminder for full details, and you will be required to acknowledge our User Agreement and Risk Reminder when you activate your Futures account.