Trading Rules of Perpetual Swaps

Trading time

Perpetual swaps transactions 7 * 24 hours. Currently, settlement is performed every 8 hours, and settlement takes place in three time periods of 00:00, 8:00 and 16:00(GMT+8). The transaction will be interrupted during the settlement period. The amount of time to interrupt a transaction depends on the time-consuming settlement of the system.

The interruption and recovery of perpetual swaps are differentiated by variety, that is, if the BTC variety is still being settled and other digital currency varieties have been settled, then other digital currency varieties can resume trading first.

 

Trading Types

Trading types can be divided into opening and closing positions. Each type can be further divided into two directions, long and short:

Open long position means that users buy a certain number of contracts when the index is bullish. When the transaction is concluded, long positions will increase.
Close long position means that users exits the market by offsetting owned buying contracts when the index is not bullish. When the transaction is concluded, long positions will decrease.

Open short position means that users sell a certain number of contracts when the index is bearish. When the transaction is concluded, short positions will increase.
Close short position means that users exit the market by offsetting the selling contract held currently when the index is not bearish. When the transaction is concluded, short positions will decrease.

 

Order types

Limit order: The user needs to specify the price and quantity of the order. The limit order specifies the highest price that users are willing to buy or the lowest price that they are willing to sell. After the user sets the limit price, the market will prioritize the transaction at a price that is favorable to the user. Limit orders can be used to open and close positions. The limit order can choose three effective mechanisms, "Post only", "FOK (Fill Or Kill)", "IOC (Immediate Or Cancel)"; when no effective mechanism is selected, the limit order defaults to "always valid".

Trigger order: The user can set the trigger price and its order price and quantity in advance. When the market's latest transaction price reaches the trigger price, the system will place an order based on the order price and quantity set in advance (ie, limit order).

BBO(Best Bid Offer) order:If the user selects BBO to place an order, the user only enters the order quantity, and cannot enter the order price. The system will read the current latest opponent's price at the moment of receiving this order (if the user buys, the opponent's price is the 1st price of the selling order; if it is selling, the opponent's price is the 1st price of buying.), place a limit order for this price.

The Optimal Top N BBO Price Order:By The Optimal Top N BBO Price Order function, it means that users can place orders based on BBO price, which users can place order faster and get it fulfilled immediately only by selecting desired price level among “top 5 optimal BBO price”, “top 10 optimal BBO price” or “top 20 optimal BBO price” and enter contract quantity. No need to take the trouble judging and entering order price. The Optimal Top N BBO Price Order function is available for both opening and closing position in both limit order and trigger order, enabling faster transaction and helping user seize potential big market move.

Flash close:Flash Close is a function that would help users to place orders with top 30 optimal prices based on the BBO price orders. In other words, users could close positions with top 30 optimal BBO prices as fast as possible. However, if there are positions left not closing, the unfilled parts will convert to Limit Order automatically. The close prices of Flash Close are predictable, avoiding the losses caused by unfilled orders when market moves violently.

 

Leverage

Perpetual swap supports 1x, 2x, 3x and higher leverage respectively, and the highest leverage supports 100x.

For example, the leverage of BTC swap is 10 times. Users only need to have 1 BTC as a margin to open long/short positions with a maximum value of 10 BTC, which will bring more profits.

The user needs to select a leverage before opening a position. After opening a position, the user can switch the current leverage of the swap when there is no pending order.

For example:

  • Tom’s account equity was 1 BTC, and he held 100 conts swaps (100 USD/contract) of a long position with leverage 5x and open price 10,000 USD. When the latest price reaches 12,000 USD, the profit and margin are as follows:
    Profits: 0.1666 BTC; PnL ratio is 83.33%;
    Position margin: 0.1666 BTC;
    Margin ratio: 697.50%.
  • Assuming Tom adjusted to 3X leverage when the latest price is 12,000 USD, the position margin, PnL ratio and margin ratio will change accordingly without the actual profits being unaffected. The data after the adjustment are as follows:
    Profits: 0.1666 BTC; PnL ratio: 50.00%;
    Position margin = (100 * 100) / 12,000 / 3 = 0.2777 BTC;
    Margin ratio = (1.1666 / 0.2777) * 100% - 1.5% = 418.59%;
  • Hence it can be seen that the position data such as position margin, margin ratio and PnL ratio will be affected by switching leverages when holding positions, but the actual profits will not.

NOTE:

 1. Only the leverage of futures in trading status can be switched when holding positions.

2. Users with positions held can only switch leverage when they have no open limit orders and trigger orders.

3. Only the leverages available for a user can be switched to;

4. If after leverage switching the margin available is less than 0, the switching will not be successful.

5. If after leverage switching the margin ratio is less than or equal to 0, the switching will not be successful.

6. Leverage switching may fail due to problems like non-trading status, insufficient margin, network problems, or system problems.

 

Positon

Users will get position after opening positions,Positions in the same direction of the same types perpetual swaps are merged. In one perpetual swaps account, there can only be a maximum of 2 positions, long positions perpetual swaps, and short positions perpetual swaps.

  • Perpetual swaps of a single type will be combined. If the user opens 1 BTC perpetual swaps first, and then opens 2 BTC perpetual swaps, then 3 BTC perpetual will be displayed at the position, they will not be separated.
  • When closing a position, the cost is calculated using the moving average method. That is, closing a position does not distinguish which position is the closed position, but calculates the income based on the average position price as the cost price.

 

Limitation of positions and orders

Huobi Futures limits users’ gross positions and quantities of orders, to prevent market manipulation.

  • As a example for BTC and ETH:

Swaps

Individual User's position limit

(Unit: cont)

Individual order size limit

(Unit: cont)

Long position

Short position

Open position

Close position

BTC

300000

300000

45000

90000

ETH

1000000

1000000

150000

300000

[searching trading limit of more trading pairs]

【The above data and indicator contents may be adjusted in real time according to market conditions, and the adjustments will be made without further notice.】

If the amount of positions or orders held by an account is too large and there is a risk of market manipulation, then Huobi Futures has the right to require the user, including but not limit to: adopt to cancel orders or close positions, etc.Riskmanagement measures of Huobi Futures are including but not limit to: gross positions limit, orders limit, cancel orders, and liquidation, etc.

Note:

  • Perpetual swaps of a single type will be combined. If the user opens 1 BTC perpetual swaps first, and then opens 2 BTC perpetual swaps, then 3 BTC perpetual will be displayed at the position, they will not be separated.
  • When closing a position, the cost is calculated using the moving average method. That is, closing a position does not distinguish which position is the closed position, but calculates the income based on the average position price as the cost price.