Perpetual Contract is the most popular contract on cryptocurrency derivatives trading, however, it is a complex concept need to have a clear understanding to avoid potential risk in the derivatives trading. Here we will briefly discuss the perpetual contract ordering type and transaction type with examples.
Perpetual Contract Order Types
The perpetual contract has a various way to do the trading, the order type includes market orders, limit orders, and some advanced delegation such as passive order, conditional market order, and conditional limit.
A market order is an order to be executed immediately at current market prices. Traders use this order type when they have an urgent execution. Pay attention to the order-book when selecting this order type, otherwise, a large market order may “walk the book” and incur market-impact costs.
User Inputs: Quantity
In order to prevent the market price order from causing an unexpected impact on the market, all market price orders will only be allowed to consume 10 levels of liquidity, and the unfilled part of the order will be canceled.
When the opponent has no order, the market price order will be forbidden
If the market price order is usually a liquidity consumer, a higher fee will be charged.
Limit orders are used to specify a maximum or minimum price the trader is willing to buy or sell at. Traders use this order type to minimize their trading cost, however, they are sacrificing guaranteed execution as there is a chance the order may not be executed if it is placed deep out of the market.
User Inputs: Quantity, Limit Price
In order to prevent the market price order from causing an unexpected impact on the market, the limited price order will only be allowed to consume 10 levels of liquidity, and the unfilled part of the order will be canceled.
When the opponent has no order, the market price order will be forbidden.
Advanced delegation function
Passive order is also a limit order. It is only different from the general limit order. Once this type of order is submitted by the investor, the server will first determine whether the limit order submitted with the quotation will be filled immediately. If the judgment result is that the order will be filled immediately, then this limit price The order will be canceled by the system, otherwise, it will be hung out smoothly, which means that investors who place orders through passive delegation will never become a taker and will always be a maker.
Users input: Quantity, commission price, and passive commission checkboxes are selected
Passive Order example
Quantity = 100 Contracts
Limit price = 103
Passive delegation checkbox = selected
Direction = buy
Current buy price = 101
In this example, if the Passive Entrust checkbox is not checked, then this delegate can buy a current price of 101 and pay the handling fee according to the liquidity consumer. If the Passive Delegate checkbox is selected, the delegate will not be executed and will be canceled. Only when the best selling price is higher than 103, this commission will be submitted to the matching engine and the handling fee will be paid according to the liquidity provider.
The user pre-sets the trigger price and the number of positions based on the judgment of the market of the trading variety, which is different from the limit order. At this time, the order does not enter the market, but when the market price reaches the trigger price, the system will automatically enter the preset order to the market. The user can select the latest market price、mark the price or index price in the trigger type to trigger the conditional order. This is an advanced order strategy more suitable for experienced traders. Conditional order also could be divided into conditional market and conditional limit.
The user sets the trigger price and the number of positions. When the market price reaches the trigger condition, the system will send the pre-set order to the market and will be matched deal by the latest market price at the time.
The user sets the trigger price, entrust price, and the number of positions. When the market price reaches the trigger condition, the system will send the preset order to the market. At this time, because of there have no orders that are better than or equal to the entrust price to match, The order enters the order list and waits for the deal.
Perpetual Contract Transaction type
There are four types of transactions: normal, forced liquidation, bankruptcy, and automatic lightening.
The trader actively chooses to close the position according to his own judgment.
When the marked price of the contract is lower than the strong price of the contract (long), or higher than the price of the contract (short), the system will force the liquidation
When traders are forced to close their positions, their remaining positions will be taken over by CCFOX's forced system. If the forced close order cannot be closed in the market, and the marked price reaches the bankrupt price, the automatic reduction system will start. The automatic depreciation system will force a downsizing of investors holding a reverse position. The order of lightening will be determined based on leverage and profit and loss ratio.
The platform adopts the automatic deleveraging system (ADL system), which automatically selects the trader holding the reverse order based on the profit and loss percentage of the trader's position and the effective leverage used to deleverage the position.
The English manuscripts are all translations of Chinese manuscripts. All standards are subject to the Chinese manuscript. Thank you.