📚 DAY 5 - Learn all Crypto terms in 30 days
1. Margin
👉This is the initial amount you need to deposit into the exchange to open a Futures position.
The higher the margin, the greater the safety (less likely to be liquidated); a low margin can lead to higher profits but also increases the risk of account liquidation.
👉Futures are typically divided into:
- Isolated Margin: separate margin for each order.
- Cross Margin: using the entire Futures balance as common collateral.
2. Funding Rate
👉The amount of money paid between Long and Short traders, on an 8-hour cycle (common).
- If the Funding Rate is positive → Longs pay Shorts.
- If the Funding Rate is negative → Shorts pay Longs.
👉The Funding Rate helps keep the Futures price from deviating too far from the spot market price.
3. Open Interest (OI)
👉This is the total number of open Futures contracts (not yet closed) in the market.
- OI increases → the market is active, with many new orders coming in.
- OI decreases → the market is closing positions, reducing liquidity.
👉Analyzing OI helps traders understand the trend of money flow and market sentiment.
4. Stop Loss
👉This is the price level you set in advance to automatically close a position when the market goes against your expected trend.
- Stop Loss helps limit losses, protecting your account from significant dumps.
👉A professional Futures trading strategy always includes setting a Stop Loss right when opening a position.
