Perpetual Futures Beginner's Guide
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What are Perpetual Futures?
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Go Long: You profit if the market price rises.
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Go Short: You profit if the market price falls.
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Core Trading Terms
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Leverage: This allows for larger trades with the same principal, magnifying both gains and losses. For example, with 10x leverage, a 5% increase in the underlying price can result in a 50% return, while a 5% drop results in a 50% loss.
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Margin: The initial capital needed to open a position.
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Initial Margin: The minimum amount required to open a position.
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Maintenance Margin: The minimum amount required to keep a position open.
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Mark Price: A price based on weighted external market data used to determine liquidations. It helps prevent unnecessary liquidations caused by market manipulation or lack of liquidity in the intraday trading price.
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Position Modes
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Isolated Mode: The margin is fixed for a specific position. The maximum loss is limited to the margin allocated to that position.
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Cross Mode: All positions share the account balance as margin. While this improves the ability to withstand price fluctuations, liquidation could result in the loss of your entire account balance.
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Risk Management: Liquidation & ADL
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Liquidation: Triggered when the margin balance falls below the maintenance margin level (maintenance margin level ≤ 100%).
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Insurance Fund: This fund is used to cover losses exceeding the margin (bankruptcy) to ensure the stability of the trading system.
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Auto-Deleveraging (ADL): If the insurance fund cannot execute a liquidation order, the ADL system selects opposing high-profit traders to reduce their positions. You can monitor your ADL risk via the lights (signal icons) on the website; more lit lights indicate a higher probability of being deleveraged.
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Tips for Beginners
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Lower Leverage: Avoid excessive leverage to prevent liquidation from minor market fluctuations (e.g., 100x leverage can trigger liquidation with only a 0.5% price move).
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Set Stop Loss: Predetermine your loss limits to prevent further capital erosion.
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Diversify Risk: Do not invest all your funds into a single high-risk position.
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