Trading Rules of USDT-Margined Swaps
USDT-margined swaps trading is 24/7 round-the-clock trading. Currently, the settlement is performed every 8 hours and takes place in three periods: 00:00, 8:00 and 16:00(GMT+8). The transaction will be suspended during the settlement and the specific time depends on the system’s execution time.
The suspension and resumption of swaps are various by variety: if the BTC/USDT swaps is still being settled, other tokens that have finished settlement can resume trading first.
Trading types can be divided into opening and closing positions. Each type can be further divided into two directions, which are long and short:
Buy to open long: the user predicts a bullish market and places an order to buy a certain quantity of swaps contracts. The user will hold long positions when the order is filled.
Sell to close long: the user is not optimistic about the future market anymore, hence he sells some contracts to close the positions. The user’s long positions will be reduced based on the quantity he sells after the order is filled.
Sell to open short: the user predicts a bearish market and places an order to sell a certain quantity of swaps contracts. The user will hold short positions when the order is filled.
Buy to close short: the user is optimistic about the market now, therefore he closes the short positions by buying the same contracts. The user’s short positions will be reduced based on the quantity he buys after the order is filled.
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. For Limit Order, three mechanisms are available to be selected, which are "Post only", "FOK (Fill or Kill)", "IOC (Immediate or Cancel)"; if no mechanism is selected, the system will continue to use Limit Order by default.
Trigger order: When using Trigger Order, the user can set trigger price, order price and quantity in advance. When the latest price reaches the trigger price, the system will place an order by using the price and quantity set in advance just like limit order.
BBO (Best Bid Offer) order: If the user selects BBO to place an order, the user is only required to enter the quantity, and the system will take the latest price of the opponent at the moment receiving this order (if the user is a buyer, the BBO price is the sell_one price; if the user is a seller, the BBO price is the buy_one price) to place an order.
Optimal N order: Using Optimal N order means that the user can place an orders based on BBO prices within the optimal N. Users can select from “Optimal 5”, “Optimal 10” or “Optimal 20” and enter the quantity to place an order. The Optimal N is available for both opening and closing positions, and for both Limit order and Trigger order, which can avoid the users' losses due to unable to fill the order when the market fluctuates violently.
Flash close: Flash Close is a function that would help users to place an order by using the prices within optimal 30 based on the BBO prices. And the unfilled parts will convert to Limit Order automatically. The close price of Flash Close is predictable, which can avoid the users' losses due to unable to fill the order when the market fluctuates violently.
USDT-margined swaps support 1x-125x leverage.
For example, if a user selects 20x leverage to open a long or short position of BTC/USDT swaps, he only need 10 USDT as margin to open a position of BTC/USDT swaps valued 200 USDT to gain more profits.
Before opening the position, the user has to select a leverage. After the position is opened, users with positions held but have no open orders could switch leverage without closing positions first.
- Tom’s account equity was 800 USDT, and he held 200 conts swaps (0.001 BTC/contract) of a long position with leverage 5x and open price 10,000 USDT. When the latest price reaches 12,000 USDT, the profit and margin are as follows:
Profits: 400 USDT; PnL ratio is 100%;
Position margin: 480 USDT
Margin ratio: 246%.
- Assuming Tom adjusted to 3X leverage when the latest price is 12,000 USDT, the position margin, PnL ratio and margin ratio will change accordingly without the actual profits being affected. The data after the adjustment are as follows:
Profits: 400 USDT; PnL ratio: 60.00 %;
Position margin = 200 * 0.001 * 12,000 / 3 = 800 USDT;
Margin ratio = (1,200 / 800) * 100 % - 2.5 % = 147.50 %;
- 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.
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.
The positions a user hold will be merged if they are of the same swaps and in the same direction and the same mode. There can only be a maximum of 2 positions for swaps that only support isolated margin mode; and a maximum of 4 positions for swaps that support both isolated and cross margin modes.
For example, BTC/USDT swaps support both isolated and cross margin mode, then users could hold isolated-margined long positions of BTC/USDT swaps, isolated-margined short positions of BTC/USDT swaps, cross-margined long positions of BTC/USDT swaps, cross-margined short positions of BTC/USDT swaps.
- The USDT-margined swaps of the same asset will be merged. For example, a user first opens 1 cont BTC-USDT swaps, then opens two conts BTC-USDT swaps, then there will be 3 conts BTC-USDT shown on the positions.
- When closing a position, the cost is calculated by using moving average method. That is to say, the system will not distinguish which one is the opening price. It uses average position price as the cost price to calculate PnL when closing the positions.
For example, if a user opens one cont BTC-USDT swaps at the price 1000 BTC/USDT, and opens another two conts of the same contract at the price 1500 BTC/USDT, then the Average Position Price = (1000*1+1500*2)/ (1+2) = 1333.33 USDT.
Limitation on positions and orders
Huobi USDT-Margined Swaps limits the position quantity and the order quantity of a single transaction for opening and closing positions to prevent market from manipulation.
- As a example for BTC and ETH
Position limit for a single user
Quantity limit for a single order
[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 position quantity or order quantity is too large, and the platform confirms that it may pose a risk to the system and other users, the platform has the right to require the users to control risk by measures including but not limited to cancelling orders and closing positions. The platform also has the right to control risks by limiting the position quantity and the order quantity, cancelling orders or liquidation.