1. What is a contract?
Contracts can reflect the price changes of a unified underlying asset and provide profits or losses resulting from price fluctuations without actually owning the underlying asset. Contracts are traded on margin, and profits or losses are determined by your buying and selling prices, offering many advantages over traditional physical stock trading.
2. Basic logic of contracts
Predicting an increase in coin price → buying long → earning profits from the increase
Predicting a decline in coin price → selling short → earning profits from the decline
In summary, if you buy long and the coin price rises after opening a position, you make a profit; if it falls, you incur a loss.
Conversely, if you sell short and the coin price falls after opening a position, you make a profit; if it rises, you incur a loss.
Profit calculation formula:
Buying long: (closing price/opening price - 1) x leverage x principal
Selling short: (1 - closing price/opening price) x leverage x principal
3. Explanation of platform fees
Trading fee: For each transaction, a fee of 0.075% of the transaction amount is charged at the time of closing (currently, the fee is discounted to 0.045%); no additional fee is charged for opening a position.
Funding rate: Fees/reward calculations for trading users are conducted daily at 0:00, 8:00, and 16:00 (total trading amount x funding rate), collected/rewarded upon liquidation.
4. Others
Forced liquidation engine: When the user's position loses 90%, the forced liquidation engine will take over the position for mandatory liquidation.
Forced liquidation: When the forced liquidation position is executed below the bankruptcy price (the price where principal loss is zero), it will generate a forced liquidation surplus, which will be injected into the risk reserve, offsetting the user's liquidation loss during settlement.
Risk reserve: The risk reserve is established by the platform to provide financial guarantees for the normal operation of contract trading and to compensate for losses incurred due to unforeseen risks from the platform.
Leverage: A 50x leverage means you have 100 yuan, and the exchange lends you 4900 yuan, allowing you to trade with 5000 yuan to achieve 50 times the original profit.
Opening limit price protection: The platform will calculate a reasonable opening price relative to the current price based on market conditions, risk reserve status, market depth, etc., allowing users to ignore severe market fluctuations and open positions instantly based on the displayed price.
