1. Understanding Position Rollover in One Sentence


Position rollover is not a literal operation but a strategy of 'closing position - rolling position - extending position' in cryptocurrency futures trading. It is an important means for leveraged players to manage risk or extend holdings, which can act as an arbitrage tool or a risk accelerator.

2. Three High-Frequency Application Scenarios and Examples


▌Scenario 1: Contract Expiration Rollover Operations


When quarterly contracts are nearing delivery (e.g., BTC June contract), one can close the old contract and open a forward contract (e.g., September contract) to extend the position, similar to 'renewing' the contract.


Note: If there is a premium (Contango) on forward contracts, the rollover may incur additional costs, and one should pay attention to changes in the price difference.

▌Scenario 2: Risk Control on the Edge of Liquidation


Example: When using 100x leverage to go long on ETH and the price plummets, one can close 90% of the position before the liquidation line, using the remaining margin to open a 10x leverage position—extending holding time by reducing leverage.


Experience Tip: Some traders have weathered corrections using this strategy, but there is also the risk of operational errors leading to a position being liquidated.

▌Scenario 3: Arbitrage Players' Price Difference Strategy


Shorting high-priced quarterly contracts on platform A while going long on low-priced perpetual contracts on platform B, locking in the price difference through position rollover at expiration, is essentially a high-level arbitrage model of 'buy low, sell high'.

3. Three Major Hidden Risks of Position Rollover Operations

1. Funding Rate Loss: After rolling over perpetual contracts, if the funding rate is high, it may continuously incur costs.


2. Price Spike Risk: If there are significant price fluctuations during the rollover, both old and new positions may face liquidation simultaneously.


3. On-chain Cost Traps: When operating on-chain contracts like ETH, network congestion may lead to a surge in Gas fees, potentially consuming part of the principal.

4. Professional Pitfall Prevention Strategies (Commonly Used by Veterans)

1. Price Difference Calculation Priority: If the premium on a forward contract exceeds 1%, be cautious with the rollover to avoid excessive costs.


2. Rate Timing Control: It is recommended to complete the rollover of perpetual contracts one hour before the funding rate updates to reduce rate expenses.


3. Gas Reserve Mechanism: Reserve at least 50 U as Gas fees for on-chain operations to cope with extreme congestion situations.

Summary: Position rollover is like 'refilling' a contract; if done correctly, it can reverse the situation, but if the strategy fails, it may accelerate the risk.

Risk. Beginners are advised to practice with small positions, and seasoned players should also strictly set stop-losses.


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