1. What is Future?
Futures, also known as futures contracts, are a form of derivative trading. Futures allow investors to speculate on the price movement of a currency without owning that currency.
=> Therefore, futures trading provides opportunities for profit in both rising and falling price markets.
2. Cross and Isolated Margin - What are they?
Cross Margin: Using the entire balance in your margin account to prevent the liquidation of open Long/Short positions (high risk, high reward).
Example: Your account has $1000. You enter a trade with $100, but you can lose the entire $1000.
Isolated Margin: You can only lose the amount you have deposited as collateral and protect the remaining funds in your account (lower risk).
Example: Your account has $1000. You enter a $100 trade, and you can only lose $100. The position will close automatically.
3. Scalping in Future - What is it?
Scalping involves making quick trades with short timeframes, often with profit targets of 20-30-50% or more if using high leverage.
Pros:
Quick profit realization, suitable for those who prefer quick gains.
Short stop-loss, helps protect your capital and profits.
Can generate profits in sideways markets.
Cons:
High stress, especially if you can't react quickly to market changes.
Requires continuous chart monitoring and knowledge of volume and charts.
4. Leverage Ratio (Leverage)
It is the ratio between the price at which you place an order and the margin you have to deposit to place that order.
Example: Leverage is 100x. If you place a $10 USDT trade, you can open a trading position worth $1000 USDT. In simpler terms, you invest 10% for such a trade.
5. Funding Rate
The funding rate is the interest rate that makers pay to takers in perpetual futures contracts. It prevents the price of the futures contract from deviating significant from the underlying index price. It is recalculated multiple times a day, usually every 8 hours.
6. Maintenance Margin
Maintenance Margin is the minimum value you need to keep your position open. The larger your position, the higher the maintenance margin requirement. To avoid auto-liquidation, you should monitor your current Margin Ratio, and if it reaches 100%, your positions will be liquidated.
7. Contract Liquidation
Since futures contracts don't have a specific expiration date, they are only terminated when the user closes the contract or it is liquidated due to exceed the leverage limit.
8. Mark Price and Last Price
To prevent sudden spikes and unnecessary liquidations during high volatility, exchanges use the Mark Price and Last Price.
Last Price: The most recent price at which the contract was traded, used to calculate actual profit and loss.
Mark Price: Used to prevent price manipulation. It is calculated using data from various spot exchanges.
9. Common Future Orders
Limit Orders (Recommended): Place orders at a suitable price, and they execute when matched.
Market Orders: Buy/sell at the current market price.
Stop Limit Orders: Set two prices, expected and undesired. If the market touches either, it will automatically stop the trade.
10. Risk Management and Capital Management
*During a downtrend, use only 10% of your total assets for trading to gain experience and profits.
*Limit each trade to 10% or less of your total trading capital (10% of your net worth) for peace of mind.
*If you experience consecutive losses, take a break to avoid impulsive and emotional decisions.
*Once in a profit, move your stop-loss to a positive 1-2%.
*Consider closing trades at appropriate take-profit levels before entering.
NOTE: Trading in futures carries a high level of risk and requires knowledge, discipline, and emotional control. Always trade responsibly and consider your risk tolerance.