NOTE; Crypto derivatives grant traders access to a wide range of digital assets without actually owning them. It allows users to protect themselves from volatility and speculate on the future value of a specific cryptocurrency. Leverage improves working capital because investors do not have to lock up significant amounts of capital, as in spot markets.
- Create your XGo account
- Transfer funds to your Derivatives portfolio wallet
- You’re now ready to start Futures Trading
Making your first futures trade
1. Select ‘Futures’ from the main menu
2. At the top, select ‘+Margin’:
3. Fill in the fields:
- Amount – The currency amount that will serve as collateral
- Leverage (x1 - x100) – the proportion of the trader's own funds of the funds needed to open a position. The exchange provides leverage, which allows the trader to execute trades where the volume far exceeds the size of the client's own funds.
4. Select Transfer
5. Make a Long or Short order):
The following data is calculated by XGo:
- Position – the desired quantity of currency to buy or sell. (from the Amount field).
- Buying power – the currency amount available for spending.
- In orders – The currency amount set aside for current orders.
- Best bid/ask – Market Depth has the best price for this side.
- Liq. Price – liquidation price. When the market price of the currency pair reaches this level, the contract will be automatically liquidated (see the Liquidation paragraph below).
- If the futures contract price is less than the liquidity price, a portion of the margin collateral will be used to cover losses.
The following data is selected by the user:
- Amount – the desired currency amount to sell or buy.
- Price – the price for the trade.
- % indicator – the position volume can be set as a percentage of Buying Power.
- Total – the preferred currency amount to receive or spend in the trade.
6. The newly created contract is now visible in the My Orders and Trades section.
The 'Show all contracts' checkbox can be used to make all contracts (for all currency pairs) visible if it is checked.
After creating the contract, you can change the Leverage by clicking the Margin button in the position line:
The contract has the following fields:
- Contracts – the main data (currency pair, leverage, Long/Short).
- Position Size – the contract size in a currency that the user wants to buy or sell.
- Entry price – the volume-weighted average price of the relevant currency pair in the futures market at the time the contract was created.
- Price – liquidation price. When the market price of the currency pair reaches this level, the contract will be automatically liquidated. (see the Liquidation paragraph below).
If the futures contract price falls below the liquidity price, a portion of the margin collateral will be used to cover the losses. - Risk – an index that shows how close the position is to liquidation. The greater the leverage chosen, the less price movement in an unfavourable (for the trader) direction is required for the liquidation to occur.
- Unr. PnL (Unreleased Profit and Loss) – a profit or loss that a trader receives or incurs if he or she closes the contract by clicking the Close button at the current mark price.
- PnL (Profit and Loss) – when the contract was partially executed, this contract generated a real profit or loss.
PnL = (Trade Price – Entry Price) * Quantity - ADL (Auto-Deleveraging) – a feature in which some traders' losses are offset by the profits of others.
When there is a significant price change, some users may not have enough margin collateral to cover their losses. This is when the ADL mechanism kicks in.
The indicator (from 0 to 4) indicates how likely the position is to be used in the ADL procedure. As a result, if all indicator cells near the contract position are active and there is a market situation in which the liquidation loss cannot be covered, this contract will be used to cover the losses of the opposite side.
In fact, this feature rarely kicks in. - Margin – a margin collateral for this position.
The list of completed trades is located on My trades tab.
OHLCV chart features
OHCLV chart has the information indicators:
- Mark price – the price at which a decision to liquidate a position is made: the mark price is compared to the liquidation price. The mark price is calculated using the formula below based on the index price.
Mark Price = Index Price + BfairBfair– "fair basis".
Bfair = Index Price * Funding Rate * (t/T)
t —the amount of time until the next funding period,
T — funding interval (8 hours)
- Index – the selected currency pair's index price. It is calculated using data from various other exchange platforms.
- 24 High/24 Low – max/min prices during the period.
- Funding Rate – the funding calculation rate. The detailed calculation is detailed above in the Principles of perpetual futures operation.
- Countdown – the funding counter. When the value reaches zero, funding payments or deductions are made, and the counter is reset.
- Open int (Open interest) – the total currency volume in open market contracts.
Liquidation
If the market price of a currency pair (Mark Price) equals the Liq. Price for a specific contract, the contract will be liquidated.
The contract will be tried to be closed at the current market price:
- The loss will be covered in part by the margin collateral.
- If the margin collateral is in excess, it will be returned to the user.
- If the margin collateral cannot cover the loss, the position will be assigned to the Insurance Fund (internal platform mechanism).
- If the Insurance Fund is unable to process the position, the ADL mechanism on the opposite market side can be used.
The liquidation mechanism also considers potential funding and penalties. So, if the Funding Rate has increased and a high Leverage is used, the position can be liquidated if the user does not have enough collateral to deduct funding. A penalty of 0.3% of the position volume is deducted from the user upon liquidation.
