Futures

Bitget Coin-M Futures guide

2024-11-11 13:11060

In the cryptocurrency industry, futures trading is typically divided into two categories: USDT-M/USDC-M Futures and Coin-M Futures. Bitget offers USDT-M/USDC-M Futures, Coin-M Futures, and Delivery Futures. This article provides an in-depth overview of Coin-M Futures, including relevant terminology and concepts.

1. Definitions and basic concepts

Coin-M Futures, also known as inverse futures, refers to futures settled in cryptocurrencies, such as BTCUSD and ETHUSD. Coin-M Futures are divided into Coin-M perpetual futures and Coin-M delivery futures, the latter featuring a specific delivery period. Investors are advised to clearly differentiate between the two types of futures.

Each Coin-M Futures has a specific futures unit, which represents the underlying amount for each trade. For example, in Bitcoin-M Futures, the futures unit might be 1 BTC or another amount (such as 0.1 BTC), varying by platform. This unit forms the basis for calculating trading volume and PnL.

Like USDT-M/USDC-M Futures, Coin-M Futures references an index price to determine its value and PnL. The index price is typically based on spot prices from major exchanges to ensure fairness and accuracy. It is a key indicator for calculating investors' unrealized PnL and determining position risk.

2. Futures trading parameters

When trading Bitget Coin-M Futures, investors should consider the following:

1. Leverage:

Bitget offers a range of leverage options, typically from 5x, 10x, 20x, 50x, to 100x, depending on the cryptocurrency. For example, Bitget's BTCUSDT Coin-M Futures offer leverage between 1x and 125x.

Investors should choose their leverage level carefully, considering their risk tolerance and trading strategy. Higher leverage can lead to greater returns but also carries significant risks, potentially resulting in rapid losses or liquidation during unfavorable market fluctuations.

2. Margin:

Before trading, investors must deposit a specified amount of USDT into their futures account as margin to facilitate transactions. The margin amount depends on the chosen leverage, position size, and current market conditions.

Bitget calculates the required margin based on a set margin ratio. For instance, if an investor wishes to engage in margin trading with 10 Bitcoins and selects a leverage of 10x, they would only need to provide 1 Bitcoin as margin to trade at the scale of 10 Bitcoins.

3. Transaction fees:

Transaction fees apply to each Coin-M Futures transaction and are paid to the trading platform. Typically, fees are charged for both opening and closing positions. Some platforms may also impose an overnight holding fee if positions are kept open overnight.

Bitget's transaction fees vary based on the user's VIP level. Click here for more details.

3. Futures terms and types

Coin-M Futures are divided into Coin-M perpetual futures and Coin-M delivery futures. Coin-M perpetual futures are similar to USDT-M/USDC-M perpetual futures, except that the value of Coin-M futures is calculated in cryptocurrency. While Coin-M perpetual and USDT-M perpetual futures can be held indefinitely, Coin-M delivery futures are distinct from the former in terms of its timeframe. Delivery futures come with a specified expiration date, meaning users are required to deliver a specified amount of assets at a particular future date. The delivery date is generally pre-determined. Holders of these futures must fulfill their delivery obligations in accordance with the futures contract on the delivery date.

Using BTCUSD0628 delivery futures as an example, the buyer and the seller agree to trade the futures at the delivery price at 4:00 PM on June 28, 2024 (UTC+8). Assuming the delivery price is $70,000, the seller sells 5 BTC at $70,000, and the buyer buys 5 BTC at $70,000. Of course, the buyer or seller can choose to close their position at the current price before the delivery date.

It is important to note that delivery entails settling the futures contract. Regardless of whether it results in a profit or a loss, the exchange will close and settle the position at the designated delivery time. Investors should closely monitor the delivery date when trading fixed-term futures to avoid delivery due to untimely closing of positions.

Coin-M Futures are generally ideal for miners or long-term holders. As futures are settled in the underlying cryptocurrency, any profits contribute directly to your long-term holdings. During a bull market, this also means that the value of your collateral appreciates accordingly.

You can also hedge positions in the futures market. To do so, open a short position in any of Bitget's Coin-M Futures. If the underlying asset's price falls, profits from the futures position will offset losses in your portfolio.

4. Order rules

1. Min. order size: Each Coin-M Futures order quantity must meet or exceed the specified minimum order size.

2. Max. order size: To manage market risk and curb excessive speculation, exchanges will set a maximum order size limit for investors. It is important to note that the maximum order size may vary depending on the cryptocurrency type and market conditions. For example, cryptocurrencies with lower liquidity may have a slightly lower maximum order size compared to those with higher liquidity, helping to mitigate the impact of large orders on market prices.

3. Order type:

Limit order: Investors can set a target price for their order, which will only be executed when the market price reaches the specified price. It helps traders buy or sell futures at their preferred price, but there may be a risk that orders may not be filled promptly.

Market order: Traders can place a market order to execute a trade instantly at the best execution price, without specifying an order price. This ensures instant execution of the order, but the execution price may differ from the investor's expected price.

Trigger order: A conditional order allows investors to anticipate market moves by setting trigger conditions, along with the order price and quantity in advance. The system will automatically execute the order at the pre-determined price and quantity when the market price reaches the trigger conditions.

5. Risk control and liquidation mechanism

1. Risk ratio calculation: Bitget calculates a user's risk ratio based on factors such as margin, position value, and current market conditions. As a critical indicator of account risk, the risk ratio is calculated as follows: Risk ratio = (margin + unrealized PnL) ÷ position value × 100%.

2. Liquidation alert: When a user's risk ratio falls to a certain level, Bitget will send a liquidation alert, prompting users to add more margin or adjust their positions.

3. Liquidation: If no action is taken after the alert and the risk ratio drops below the exchange's preset liquidation threshold, the liquidation system will be triggered. The platform will close the user's positions at the best market price to minimize losses and market impact. The liquidation threshold typically ranges between 20% and 50%.

6. Disclosure and transparency

As a leading crypto exchange, Bitget is committed to user education and provides various product-related tutorials. There is a dedicated risk education section for USDT-M/USDC-M Futures, helping investors understand trading rules, risk characteristics, and risk management strategies. In addition, Bitget regularly publishes educational articles and hosts online training sessions to further support users.

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