What is a Contract Market?

Contract trading is a collective term for the exchange of Bitcoin Litecoin futures contracts on the 796 exchange.

Contract transaction

Right!

Contract trading is a collective term for the exchange of Bitcoin Litecoin futures contracts on the 796 exchange.

Chinese name

Contract transaction

Time

June 2013

Event

796 transactions

Belongs to

economic

In June 2013, the 796 Exchange took the lead in developing the bitcoin weekly delivery standard futuresT + 0 two-way trading virtual commodity as a barter contract (contract transaction) in the bitcoin industry. The emergence of contract transactions ended the previous history of Bitcoin being unable to be short, and opened the prelude to the development and prosperity of the Bitcoin derivative market.

The BraveNewCoin price index BraveNewCoin ('BNC') 7x24 collects data from the world's mainstream cryptocurrency exchanges without interruption, and calculates the BNC price index (BraveNewCoinPriceIndex, 'BPI') of each cryptocurrency separately to obtain the The latest weighted average price. The average price is the nominal exchange rate of the cryptocurrency against the US dollar (that is, denominated in US dollars).
Weighted average price Many exchanges trade in multiple currencies. BNC collects data for different currencies in each cryptocurrency market separately, and calculates the weighted average price of each market during each data collection cycle. For example, for Bitcoin (BTC-CNY) traded in RMB, its market weighted average price (MWA) is the weighted average price of all exchanges that open this currency pair. Hourly volume is weighted and then converted to US dollars.
Data Collection Cryptocurrency exchanges provide current data on their exchanges. BNC collected. Each collection period is 5 minutes, and the collected data includes the latest transaction price of each cryptocurrency and the transaction amount in the past 24 hours. If the exchange can provide it, BNC will also collect the latest bid and offer prices for each currency pair. If data is not available for a certain period of time on an exchange, the BNC will report it. BNC will collect data on newly opened exchanges. 796 Editor's Note: As long as the data is true, it will not discriminate against the data of smaller exchanges.

It may feel complicated at first when it comes to contract. In fact, as long as it takes a few minutes to understand a few basic knowledge points, you can understand how the contract works. After many traders contact the contract, they feel that the contract is easier to operate than the spot. Let's take a look at the basics of contracts.
Basic concept-simplicity is the beauty of the jump: the price of the contract will change up and down. The smallest unit of change we call "jump." This is similar to the steps on a staircase. Stairs are the same as the smallest unit of change of a staircase, while "jump" is the smallest unit of change of a contract.
Minimum jump: the minimum value of the contract price up and down, that is, the size of each "jump." You can think of it as the height of the stairs. The minimum jump for Bitcoin and Litecoin contracts is $ 0.01, which means that each time the price changes at least $ 0.01. For a barter, a dollar sign or any other sign is meaningless. Just like climbing stairs, you only care about the number of steps, not the height of each step. What's more, the minimum jump for each contract is set in advance, and market participants cannot change it, so no one cares about it. Only when choosing a trading market is the minimum jump worth studying. Once the transaction starts, don't worry about it.
Minimum jump value: The total profit or total loss brought to the trader by each "jump" in the contract price. In the Bitcoin contract, the representative unit of the jump value is Bitcoin; in the Litecoin contract, the unit of the jump value is Litecoin. Different from the minimum jump, the size of the minimum jump value can be changed by the trader, so we must pay attention to the minimum jump value. Traders start trading by opening positions. After the position is established, for every jump in the contract price, the trader will make a profit or loss. Traders can adjust the minimum jump value by changing the size of the position (position). Opening a larger cryptocurrency (Bitcoin or Litecoin) position means a larger minimum jump value. Once a position is established, the minimum jump value is fixed no matter how the current USD price changes. At this time, the trader can simply calculate the current profit or loss of the position by calculating the number of jumps. Calculation formula: profit / loss (profit and loss) = minimum jump value x the number of jumps in the position. For example: the latest price is 3.21USD from the position, because the minimum jump is 0.01USD, so the change amount of the bar in the position = 3.21 / 0.01 = 321 jumps. Profit and loss = minimum jump value x321.
Note: The minimum jump value can be intuitively viewed using the trading calculator provided in the 796 trading order interface. The minimum jump value can help traders understand the amount of risk faced by an open position. The minimum jump value, the amount of positions (the number of transactions), and the transaction guarantee (the virtual funds of the transaction) are the three swordsmen of commodity bartering. Understanding the relationship between them can help you master the knowledge of bartering goods.
Judging the direction position: In commodity barter, the position refers to a trading state. If a position is held, it means that after the order is placed, the two parties in the transaction hold the contract in the opposite direction at the agreed price and quantity, and are matched and closed with each other. After opening a position (opening a position), the trader will hold the position until the position is closed by closing, expiring settlement, or liquidation.
Position: The number of cryptocurrencies in the position. It should be noted that each contract is held jointly by two traders holding positions in opposite directions. Positions refer to the amount of cryptocurrency that a trader has unilaterally owns. If a trader increases (signs more contracts) or decreases (partially closes) the number of open positions, we call it Position Sizing. Note: Open interest does not equal investment principal. In commodity barter, the investment principal is the initial transaction guarantee.
(Look) Long / (Look) Short: In commodity barter, traders need to accurately predict the direction of price changes and then invest. Contract positions have only two directions: long and short. Bullish is predicting the price to rise, and bearish is predicting the price to fall. There are only four scenarios for bartering:
In a long position, the latest price is higher than the opening price, and the more "jump" points that leave the position, the more profit a trader will make (more precisely: the more unrealized profit).
In a long position, the latest price is lower than the opening price. The more "jump" points that leave the position, the more the trader loses (more precisely: the more unrealized losses).
In a short position, the latest price is higher than the opening price. The more "jump" points that leave the position, the more the trader loses (more precisely: the more unrealized losses).
In a short position, the latest price is lower than the opening price, and the more "jump" points that leave the position, the more profit a trader will make (more accurately: the more unrealized profit).
Position category ups and downs Buy long profit loss Short sale loss profit Optimize original virtual capital role Transaction guarantee: If you want to use leverage in contract transactions, you need to pay a performance guarantee (guarantee), which is a transaction guarantee. Transaction guarantees typically account for a small portion of the total contract value. At 796, this ratio was optional; they were 5%, 10%, and 20%, respectively. In other words, 796 provides a high barter leverage for commodities. Traders can use relatively few virtual funds to control contracts of great value. This gives traders great flexibility and high trading efficiency. You may think that the function of leverage is similar to buying stocks with transaction guarantees. But in the stock market, using transactions to buy stocks means borrowing to buy. In contract markets, transaction guarantees are not part of the payment made when a product is purchased. It's just the collateral (credit) you submit to ensure that you can fulfill your daily position obligations. This is required for both the buyer and seller of the contract.
Tip: The transaction guarantee is deducted from the transaction guarantee account. Please transfer the cryptocurrency from your cryptocurrency wallet to the transaction guarantee account.
Initial transaction guarantee: a performance guarantee submitted when the position is opened. After the trader completes his contractual obligations, the trade guarantee will be returned to the trader's trade guarantee account. The required amount of initial transaction guarantee is only a small part of the amount required to actually purchase the cryptocurrency in the contract. Simply put, when you trade goods in 796, when you open a position, you can choose a 5%, 10%, or 20% of the virtual fund amount of the mortgage position as a transaction guarantee.
Position Funding-Size Matters Razor_trader of ForexFactory.com said: "Leverage small to control large. This is very good for brokers, because if you use leverage blindly, your account will quickly dry up. So despite the broker Providers provide high leverage, but you can still choose how to invest yourself. A relatively low percentage will offset the side effects of leverage. "
The above statement is completely correct.
But please note that 796 exchange is not the kind of broker that Razor_trader says. In fact, Razor_trader refers to the barrel company (now illegal) on the stock market and the trading desk of the fiat currency trading industry. For example, FXCM, a legal currency broker listed on the New York Stock Exchange, publicly stated: "In the trading counter mode, FXCM, as a dealer, will set the price and spread of the currency pair you trade. In this mode, FXCM can see Your stop loss limit and profit from your trading losses. In our experience, providing trading desk execution is a common practice for brokers in the market.
The 796 exchange does not trade with traders and does not profit from any losses of traders. 796 is only used as a platform to provide fair and transparent order matching services and settle contracts. At 796, high leverage was not a way to quickly consume the balance of a trader's account, because doing so did no good to 796. In fact, the 796 exchange has been adding more explosion-proof warehouse functions to help traders better deal with risks.
Well-known financial writer Dr. VanTharp has created and popularized the method of "position financing" to manage transactions. High leverage is an outstanding feature provided by 796 to the cryptocurrency community, and 796 is proud of it. As mentioned earlier, low initial transaction guarantees (high leverage) give traders greater flexibility and efficiency in the use of virtual funds. That is, by using high leverage, traders can adopt richer position funding strategies to increase the chance of equity growth.
Position funding: refers to the size of the position, or the number of cryptocurrencies held and closed by the trader. Position funding is closely linked to virtual fund management and has always been a top priority for traders. If you want to learn more about position funding, we strongly recommend that you use Google or DuckDuckGo search engines to find more information about position funding strategies. Learning position funding can make better use of high leverage.
Contract Trading-Market Dynamic Coefficient Claiming Agency: 796 Exchange
The concept of the market dynamic coefficient must start from the profit and loss calculation formula.
When buying long, floating profit and loss = (latest transaction price-weighted average price) / market dynamic coefficient * number of positions.
Example: The number of investors' long positions is 10 (BTC), the weighted average price is 350 (USD), the latest transaction price is 360 (USD), and the market dynamic coefficient is 400, then the floating profit and loss is equal to (360- 350) /400*10=0.25 (BTC).
You know, the 796 platform does not involve any fiat currency transactions, all transactions are settled with> cryptocurrency (Bitcoin or Litecoin), and the price of the subject matter (Bitcoin or Litecoin) of our contract is in US dollars It is calculated, so the actual profit and loss calculated in US dollars should be converted into> cryptocurrency when settling. In the above example, the floating profit and loss calculated in US dollars = (latest transaction price-weighted average price) * number of positions = (360-350) * 10 = 100 (US dollars), dividing 100 by the market dynamic coefficient yields> The actual profit and loss calculated in cryptocurrencies. Therefore, the market dynamic coefficient is actually equivalent to a base currency value, that is, the reference price of each cryptocurrency (USD).
How to determine the market dynamic coefficient?
The market dynamic coefficient is equal to the highest value of the price range (USD) in which the settlement price last week was located. In terms of BTC contracts, if the settlement price last week was 380 (in the price range of 300 ~ 400), the market dynamic coefficient would be 400. For the determination of the market dynamic coefficients of the two types of contracts, please refer to the leverage table of the BTC contract-weekly delivery contract and the LTC contract-weekly delivery contract in the Help> Virtual Commodity Bargaining Rule. Because the system is settled once a week, the market dynamic coefficient is refreshed once a week, in other words, its validity period is one week.
Why choose a market dynamics coefficient like this?
Why does the market dynamic coefficient take the highest value of the price range where the settlement price last week was located, rather than the lowest value of the range or the latest transaction price? In general, this is to allow a uniform reference standard for the profit and loss conversion (USD to Cryptocurrency) of the entire 796 platform, so as to maintain the stability of the platform's profit and loss calculation. However, the significance does not stop there. The highest value of the price range where the settlement price was last week is a fixed integer. Choosing it as the market dynamic coefficient can ensure the stability of the 100% profit and loss fluctuation value, so that the liquidation price has a fixed reference. Because 100% profit and loss fluctuation value = market dynamic coefficient * required initial transaction guarantee ratio, if the market dynamic coefficient is 400 and the initial transaction guarantee ratio is 10%, then the 100% profit and loss fluctuation value is equal to 40 (USD), and the position is closed. Price = opening price ± 100% profit and loss fluctuation value. We know that the latest transaction price is always changing. If it is used as the market dynamic coefficient, it will destroy the stability and balance of profit and loss calculation. The 100% profit and loss fluctuation value is directly linked to the market dynamic coefficient. The market dynamic coefficient is Constant fluctuations will make the 100% profit and loss fluctuations follow, making it difficult to determine the liquidation price. And if the lowest value of the price range where the last settlement price was selected is used as the market dynamic coefficient, the denominator of the profit and loss formula is significantly underestimated, making the profit and loss calculation unreasonably enlarged, which is not conducive to maintaining the stability of platform transactions.
Contract Trading-Dynamic Limit Mechanism Claiming Institution: The 796 Exchange Dynamic Price Limit ('DPL') mechanism is used to resist extreme price volatility and prevent artificial malicious manipulation of prices.
Buying long positions and closing short positions are buy orders, which are "buy orders"; Selling short open positions and closing long positions are sell orders, which are "sell orders." When placing an order (opening or closing a position), the system places an upper limit on the bid price of the "buy order" and a lower limit on the ask price of the "sell order", which are: "BEC" and "Lowest Sell Order" Limit Price "(AEF).
It should be particularly noted that when a stop loss or liquidation occurs, the pending order price submitted by the system to close the corresponding position is also subject to the dynamic price limit mechanism.
Note that the Bid Order Maximum Limit (BEC) and Sell Limit Low (AEF) are different from the Limit Move mechanism in the traditional contract market. `` Limits of change '' means that in order to curb excessive speculation and prevent the market from excessively rising and falling, the daily trading price is required to fluctuate based on the closing price of the previous trading day. Amplitude. The upper limit of the day's price increase is the daily limit board, and the lower limit of the price drop is the daily limit board. BEC and AEF limit the price of a contract in one direction, and the "limit change" is a two-way limit on the transaction price. It is forbidden that the latest transaction price exceeds the limit range. However, the 796 exchange will not prevent pending orders already in the order book from being placed. Matching and trading outside the limit line.
We must know that there is a certain difference between the dynamic price limit mechanism of weekly and quarterly contracts. The following two figures clearly illustrate the difference between the two.

Table 1
"Micro-movement value" = "Market dynamic coefficient" / 100
"Exponential Movement Value" = "Market Dynamics Coefficient" / 10
For contract highs or index highs, the system selects the lower value of both as the "Buy Maximum Limit Price" (BEC).
If the contract is low or the index is low, the system selects the higher value as the "sell minimum price" (AEF).
When buying long or closing a short position (ie placing a buy order):
For weekly contracts, contract highs = "buy base price" + 80% "micro shift value"
For quarterly contracts, contract high = "base price for buying" + "micro-movement value"
"Buy benchmark price" is the highest of all transaction prices during the first 60 to 120 seconds;
If there is no contract transaction during the first 60 to 120 seconds, the one with the highest transaction price in the first 120 to 180 seconds will be taken;
If there is no transaction during the first 120 to 180 seconds, the last transaction price before 180 seconds is taken.
When opening a short position or closing a long position (ie placing a sell order):
For weekly contracts, contract low = "sell benchmark price"-80% "micro-movement value"
For quarterly contracts, contract low = "sell benchmark price"-"micro-movement value"
"Sell benchmark price" is the lowest of all the transaction prices during the first 60 to 120 seconds;
If there is no contract transaction during the first 60 to 120 seconds, the lowest transaction price of the first 120 to 180 seconds is taken;
If there is no transaction during the first 120 to 180 seconds, the last transaction price before 180 seconds is taken.
As shown in the figure, the micro-movement value, the index movement value, the buying and selling base price, and the latest index value all affect the dynamic price limit mechanism of our system. As the bid and offer base prices and the latest values of the index are constantly changing, the "high limit for buy orders" and the minimum limit for sell orders also change at any time.
The "market dynamic coefficient" of quarterly contracts is equal to the highest value of all price ranges of the settlement price of the previous quarter. However, since the quarterly contract is a newly launched product, from the launch of the quarterly contract function on December 12, 2014 to the first settlement date (March 1, 2015), the "market dynamic coefficient" corresponding to the quarterly contract is unified The "market dynamic coefficient" corresponding to the BTC weekly contract when it was launched, that is, fixed at 400.
For MarketDynamicCoefficient (MDC) values, please refer to the BTC contract-weekly delivery contract leverage table and LTC contract-weekly delivery contract leverage table in Help> Virtual Commodity Bargaining Rules.
Contract Trading-Counterparty Risk and Apportionment Funds: When the market conditions of the 796 Exchange change significantly, if the initial transaction is guaranteed to be occupied by a held position, and the transaction direction is opposite to the market trend, it is very difficult due to leverage effects. Easy to liquidate (also known as: forced liquidation).
The user may have such a question in the transaction: "I already have a position that is profitable, and my counterparty will be affected after the loss reaches a certain level and trigger a liquidation. Will my position profit be affected?"
The answer is no. Even if the counterparty is out of stock, the profitee can still make more than 100% profit.
After the user closes the position, he will only lose the transaction guarantee occupied by the position, and the position holding amount is cleared. At the same time, the system will automatically place the position into the market at a more unfavourable pending order price than the liquidation price and wait for liquidation (reverse liquidation. For details, see the liquidation and stop loss rules), before the transaction is not completely completed, 796 trades. We will temporarily hold the position as a profitable counterparty to ensure the balance of the long and short positions in the market.
"Is this fair?"
The 796 exchange provides traders with the convenience of losing a value close to -100% before triggering a liquidation. Everyone enjoys this benefit every week. So naturally when there is a system loss (the system takes over the liquidation order and hangs it into the market, such as settlement There will be a systematic loss before the transaction is completed), and it is fair to share the net profit of Zhou in proportion; therefore, there will be no risk of failure of the exchange. The calmness of the disk guarantees price stability and severes the possibility of serial short positions!
An important principle of the 796 Exchange is that 796 only provides transaction matching services between investors and does not participate in trading itself, so the profit of an investor must be a loss from an opponent. In other words, during the same trading contract period, the net profit of all accounts should equal the net loss of all accounts. However, because of short positions in individual accounts, long and short positions may be out of balance. In order to maintain balance, the 796 exchange system temporarily holds positions after a liquidation, and waits for liquidation to close the position. In the unfortunate time, on Saturday's system settlement time, there is no counterparty to match it, the position naturally cannot be closed, then the 796 exchange will hold the position to participate in the settlement, resulting in a temporary holding loss of the system "System Loss" (SystemAssumedCounterpartyLoss, SACL).
In order to prevent the loss-sharing risk of the system, the 796 Exchange deliberately introduced the important mechanism of shared funds and improved the rules of liquidation. The "allocation fund" is directly linked to the "out-of-position premium" because its direct source of funds is the "out-of-position premium" surplus (after deducting losses from the system's reverse liquidation). The purpose of "shared funds" is to fill "system losses". The "system loss" generated during the settlement will be filled first by the "shared fund". In case the balance of the "shared fund" is not enough to fill all the "system loss", all accounts with net profit during the contract cycle will be shared in proportion. .
Under the current mechanism, after the position is closed, the system takes over the position and reverses the position. This can significantly increase the transaction rate (that is, greatly reduce the chance of generating a system loss), and the "asset fund" can largely fill the "system loss" caused by extreme price fluctuations. The combination of the two can reduce the risk of "system loss" sharing to a very low level. In addition, in order to quickly replenish the Fund to the Contribution Fund to improve the mechanism, the 796 Exchange plans to inject 100 BTC into it every week before the end of 2014.
We can use calculations to understand the above mechanism. After weekly settlement,
Net profit of all accounts = Net loss of all accounts + SACL
The conversion equation is:
SACL = Net profit of all accounts-Net loss of all accounts Profit sharing of account = (SACL-"shared fund") / Net profit of all accounts × Personal account profit If the balance of the "shared fund" is greater than the system loss (SACL), then no profitable account is required Share any "system losses".
Contract Trading-Order Matching Mode Claiming Institution: 796 Exchange 796 Exchange only provides the Limit Order order matching mode, and does not provide the Market Order order matching mode. In other words, the system only allows each order to be matched and traded at its pre-specified limit order price or more preferential price; there will never be a negative slippage (NegativeSlippage) that may occur in the market price order matching. Specifically, the combined price of a sell order (short sell or long buy) will only be greater than or equal to its selling price, and the combined price of a buy order (long buy or short sell) will only be less than or equal to Its buying price.
Aggressive Order and Passive Order Each successful transaction involves two limit orders: "Aggressive Order" and "Limit Order". How to distinguish which one is "aggressive order" and which one is "passive order"?
In the process of transaction matching, for the sake of absolute fairness, the order entrustment book ("Order Book") has only one order processing port, and each order is received by a single thread. Physically, there will never be any one order placed on the order at the same time. Every order that is put together will have a morning and a night, that is, an order is successfully matched with another order that appeared earlier in the Order Book and then closed. Orders that appeared earlier were called "PassiveOrders" (Makers); late orders were called "AggressiveOrders" (Takers).
An "aggressive order" will be preferentially matched with the "passive order" with the best price. If the number of "aggressive order" is greater than the number of passive orders at the time of matching, the system will split the "aggressive order" into two parts, and the untraded part It will match with the next best-priced order. The above process is repeated until the entire "aggressive order" is completed or the "passive orders" that can be matched with it are all matched. When two or more "passive orders" have the same price, the "aggressive order" will be preferentially matched with the "passive order" that entered the order book first. For an example, please see the following table: 3
The above table is a display of a series of sell orders intercepted from the order book, arranged by the selling price from low to high. If there is a buy order with a bid price of 385 and a quantity of 100, then the order will be matched with the sell order above, that is, the sell price is 384.30, then the sell price is 384.48, and so on, until The entire buy order is completed or all sell orders above 385 are completed. Corresponding to the above figure, when the above-mentioned buy order and the order with a selling price of 385 are completed, there is a remaining amount of 22.12 unfilled. This part of the order is to wait for an order with a selling price less than or equal to 385 to appear again in the market before it is expected to be transacted. Delayed reconciliation of transaction guarantee account balance (DelayinMarginAccountReconciliation)
It is important to note that the system will reconcile the profit and loss of the order after all the splits in a closed order have been matched and then credited to the margin account. Therefore, the first split order will be delayed for settlement. In addition, for "passive orders" and closing positions, even if the entire order is completed at a single price, delayed settlement may occur. Therefore, if the user wishes to make part of the orders that are split during the transaction first to close or close the position to increase the transaction guarantee account balance in a short period of time to automatically increase the transaction guarantee to prevent liquidation, this approach will have certain risks. It is recommended that users reserve sufficient balance in the transaction guarantee account.
Contract Trading-Stop Out and Stop Loss Rules Claiming Agency: 796 Exchange Stop Out Rules Weekly Out Stop Rules For long positions:
Short position price = `` weighted average price ''-`` 100% profit and loss fluctuation '' + 50% `` micro-movement value ''
= "Weighted average price"-("Initial transaction guarantee ratio"-0.5%) × "Market dynamic coefficient"
For short positions:
Short position price = `` weighted average price '' + `` 100% profit and loss fluctuation ''-50% `` micro-movement value ''
= "Weighted average price" + ("Initial transaction guarantee ratio"-0.5%) × "Market dynamic coefficient"
According to the current rules, the critical point of the profit / loss ratio of a short position is not "-100%". Can be calculated based on the liquidation price: 4
Initial transaction guarantee ratio triggers a short position profit / loss ratio and a short position buffer ratio of 2% (only applicable to BTC) -75% -25%
5% -90% -10%
10% -95% -5%
20% -97.5% -2.5%
When the initial transaction guarantee ratio is 2%, the profit-loss ratio of "-75%" triggers a liquidation;
When the initial transaction guarantee ratio is 5%, the profit-loss ratio of "-90%" triggers a liquidation;
When the initial transaction guarantee ratio is 10%, the profit-loss ratio of "-95%" triggers a liquidation;
When the initial transaction guarantee ratio is 20%, the profit-loss ratio of "-97.5%" triggers a liquidation.
After the position is closed, the user will lose all the trading margin of the position. Theoretically, the transaction guarantee balance of the corresponding position when the liquidation is triggered = "Position" x 0.5%. This part of the transaction margin balance will be charged by the system as the "Pocket Expense" to compensate the system for the reverse liquidation of the liquidation (The closing of pending orders at a price that is more unfavourable relative to the closing price) and the system losses resulting from weekly settlement. For the explanation of "out of stock premium", please click out of stock premium.
After the position is closed, the system takes over the user's position and waits for the transaction at the default pending price.
For long positions, the default pending order price = "weighted average price"-"100% profit and loss fluctuation" = liquidation price-50% "micro shift value"
For short positions, the default pending order price = "weighted average price" + "100% profit and loss fluctuation" = liquidation price + 50% "micro shift value"
example 1:
There is a long position with an "Initial Trading Guarantee Ratio" of 10%, whose "weighted average price" is 380, the "market dynamic coefficient" is 400, and the "position volume" is 10, then we can know that "100% profit and loss fluctuations" = " Market Dynamic Coefficient "/ 10 = 40," Micro-Motion Value "=" Market Dynamic Coefficient "/ 100 = 4, then the short position price =" weighted average price "-" 100% profit and loss fluctuation "+" 50% "micro-movement value `` '' = 380-40 + 50% × 4 = 342
= `` Weighted average price ''-(`` Margin ratio ''-0.5%) × `` Market dynamic coefficient '' = 380- (10% -0.5%) × 400 = 342
Then, after taking over the position, the system will immediately enter the market and close the position at the price of the default pending order price = "weighted average price"-"100% profit and loss fluctuation" = 380-40 = 340.
What are the consequences of a closed position being linked to the market?
First, if the position is just closed at the pending price, the system's profit and loss is balanced, that is, the loss caused by the system's liquidation is equal to the "out of stock premium".
In Example 1, after the system takes over a closed position, it will be linked to the market at the default pending price (340). If the position is just filled at the pending price of 340, the "system close loss" = (342-340) ÷ 400 × 10 = 0.05, and out-of-the-money premium = 10 × 0.5% = 0.05, that is, system close-out loss = out-of-the-box premium, the system's profit and loss balance.
2. If the position is closed better than the pending order price, the "system close loss" = | closing price-closing price | ÷ "market dynamic coefficient" × premium surplus generated by the holding volume system = "outstanding premium"-"system Liquidation loss
In the above example, if the position is closed at the price of 341, then the "system close loss" = (342-341) ÷ 400 × 10 = 0.025, then the premium surplus generated by the system = "closed premium"-close the position Loss = 0.05-0.025 = 0.025, where 0.025 will go to the "shared fund" to cover the system losses generated by weekly settlement.
3. If the liquidation is not realized, the losses incurred in the corresponding position during the weekly settlement are included in the "system loss".
In the above example, if the closed position taken by the system entered the market with a pending order price of 340 and could not be traded, that is, once the market price fell below 340 and there was no rebound, if the final weekly settlement price was 325, because The cost price of the position held by the system is 342 (closed position price), then the "system loss" caused by the position = (342-325) ÷ 400 x 10 = 0.425, and the "open position premium" of the position will be 0.05 All are included in the "Assessment Fund". In the whole process, the actual loss caused by the short position to the system = 0.425-0.05 = 0.375.
Note: The system's pending order price for short positions is also subject to the "dynamic price limit mechanism". In the above example, theoretically, the system's pending order price = 340, but if it coincides with the "short selling allowable minimum limit price" = 340.5, then the system's actual pending order price can only be adjusted to 340.5.
Quarterly Contract Explosion Rule In order to meet the long-term investment needs of customers, 796 specifically launched the "BTC Quarterly Contract", a contract that is settled only once a quarter.
Due to the poor liquidity of quarterly contracts, in order to control their trading risks, quarterly contracts provide less and lower leverage than weekly contracts. There are only two types of "initial transaction guarantee ratios" provided by them: 100% and 20% (1 Times and 5 times leverage). In addition, 100% of the initial transaction guaranteed matching positions are exempt from the "contract handling fee".
For long positions:
Short position price = `` weighted average price ''-`` 100% profit and loss fluctuation '' + 200% `` micro-movement value ''
= "Weighted average price"-("Initial transaction guarantee ratio"-2%) × "Market dynamic coefficient"
For short positions:
Short position price = `` weighted average price '' + `` 100% profit and loss fluctuations ''-200% `` micro shift value ''
= `` Weighted average price '' + (`` Initial transaction guarantee ratio ''-2%) × `` Market dynamic coefficient ''
The corresponding relationship between the profit and loss ratio of the quarterly contract and the "initial transaction guarantee ratio" is as follows: 5
The initial transaction guarantee ratio triggers a liquidation of profit and loss ratio. The buffer ratio of liquidation is 20% -90% -10%
100% -98% -2%
When the initial transaction guarantee ratio is 20%, the profit-loss ratio of "-90%" triggers a liquidation;
When the initial transaction guarantee ratio is 100%, the profit-loss ratio of "-98%" triggers a liquidation.
After the position is closed, the user will lose all the trading margin of the position. The guaranteed transaction balance of the corresponding position when the quarterly contract triggers a liquidation = "Position" × 2%. This part of the transaction margin balance will be collected by the system as a "circulation risk surcharge" to compensate the system for the reverse liquidation of closed positions. (Close the position at a more unfavorable price than the closing price) and the system losses resulting from the quarterly settlement. It should be known that the system losses generated by quarterly contracts are all borne by the 796 exchange, and the profit accounts will not be prorated.
For a description of "Circulation Risk Surcharge", please click: Quarterly Contract Circulation Risk Surcharge.
The low-leverage trading of quarterly contracts (1x and 5x) determines that the possibility of quarterly contract liquidation is very low. For example, when the market dynamics coefficient is 400, the initial transaction guarantees a quarterly contract with a ratio of 100%. When the latest transaction price reverses the weighted average price by nearly 400 US dollars, a liquidation will occur, which is almost impossible. ; Quarterly contracts with an initial transaction guarantee ratio of 20%. It is also very rare that a short position will occur when the latest transaction price reverses the relative weighted average price by nearly 80.
After the quarter contract is closed, the system takes over the user's position and closes the order according to the "high limit of the buy order" (for short positions) or the "low limit of the sell order" (for multiple positions), and the system's pending order price will follow the real-time "best order Limit price or Sell limit price floats, but the floating range is limited. The long position system closes the position with a lowest pending order price, and the short position system closes the position with a highest pending order price, as follows:
For long positions, the lowest pending order price = "weighted average price"-"100% profit and loss fluctuation" = liquidation price-200% "micro-movement value"
For short positions, the highest pending order price = "weighted average price" + "100% profit and loss fluctuation" = liquidation price + 200% "micro-movement value"
Stop Loss Rule The 796 exchange's stop loss model is a financial industry innovation. Users can manually set two prices for any positions they hold: Stop Loss Trigger Price and Stop Loss Pending Order Price to control the potential loss risk or protect unrealized profits in advance. When the "Latest Transaction Price" reaches or exceeds the "Stop Loss Trigger Price", the system will automatically place a stop loss position at the "Stop Loss Pending Order Price" into the market and close the position. For example, a user sets the Stop Loss Trigger Price and Stop Loss Pending Order Price for a long position to 350 and 349 respectively. When the Latest Transaction Price 350, a stop loss will be triggered and the system automatically The closing price of 349 is a pending order; conversely, if the user sets the "Stop Loss Trigger Price" and "Stop Loss Pending Order Price" of a short position to 350 and 351 respectively, the stop will be triggered when the "latest transaction price" 350 Loss, the system automatically places an order for the position with a closing price of 351.
Therefore, stop loss is actually equivalent to a conditional liquidation, that is, the user's closing order will only take effect immediately after meeting its pre-set conditions. Specifically, the "latest transaction price" reaching the "stop loss trigger price" is the stop loss trigger condition, and the "stop loss pending order price" is the price of the closing order when the above closing order is effective. As for the successful closing of a position after a stop loss trigger, it depends on the contract price in the market and the spread between the stop loss trigger price and the stop loss pending price set by the user. In general, the larger the difference between the stop loss trigger price and the stop loss pending price, the higher the success rate of closing the stop loss, but at the same time the user will also lose more. Therefore, the user should reasonably set the "Stop Loss Trigger Price" and "Stop Loss Pending Order Price" to ensure a sufficiently high success rate of Stop Loss Closing and control the loss within an acceptable range, or to keep both balance.
Note that the actual pending order price of the stop loss is also subject to the "dynamic limit price mechanism". Under normal circumstances, the actual pending order price of the stop loss is equal to the "stop order price". There are exceptions. For a long position, if the "Stop Selling Low Limit Price" is greater than the "Stop Loss Pending Price" at the moment when the stop loss is triggered, the actual pending order price of the stop loss position is "Selling Price Lowest Pending Limit" ; For a short position, if the stop-loss triggering moment when the "maximum limit price for long buys" is less than the "stop limit price", the actual pending order price of the stop loss position is "maximum limit for long buys" .
Note: Stop Loss cannot be set for positions with the "Initial Trading Guarantee Ratio" of 2%. Once the stop loss set for a position is triggered, all existing closing orders for the position will be cancelled.
There are certain restrictions on the setting of the "Stop Loss Trigger Price" and "Stop Loss Pending Order Price", as follows:
For long positions,
Short position price + "micro-movement value" "stop loss trigger price" "latest transaction price"-50% "micro-movement value"
Short position price + 50% `` micro-movement value '' `` stop loss pending order price '' `` stop loss trigger price ''
For short positions,
"Latest Transaction Price" + 50% "Micro Moving Value" Stop Loss Trigger Price Stop Out Price-"Micro Moving Value"
"Stop Loss Trigger Price" "Stop Loss Pending Order Price" Stop Out Price-50% "Slightly Moving Value"
Note: The latest transaction price here refers to the latest transaction price at the moment when the stop loss price is set.
Example 2:
The situation of a long position is as follows:
`` Weighted average price '' = 350USD
`` Latest Deal Price '' = 345USD
"Market Dynamics" = 400
"Micro-movement value" = market dynamic coefficient ÷ 100 = 4
`` 100% profit and loss fluctuation value '' = `` Market dynamic coefficient '' ÷ 10 = 40
The liquidation price + 50% "micro-movement value"
= "Weighted average price"-"100% profit and loss fluctuation" value + 50% "micro shift value" + "micro shift value"
= 35040 + 50% × 4 + 4
= 316
That is, 316USD is the lower limit of the "stop loss trigger price" at this time.
The upper limit of Stop Loss Trigger Price = Latest Trade Price-50% Micro Moving Value = 3452 = 343

The 796 exchange started Bitcoin futures at 796.com in June 2013 (T + 0 long-short bi-directional barter week combined contract), and the transaction volume is based on the top three in the entire network. Assets are transparent and verifiable assets; the first is to push forward the prevention mechanism of the premium fund explosion prevention caused by high leverage; the first to create a socialized cryptocurrency trading fund to solve the problem of copy trading being affected by market depth (market shock). More >>

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