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Getting Started with Futures Trading

Before Trading:

You’ll need to move currency from your wallet or spot trading account to your derivatives account.

  1. Open the Account page.
               
  2. Select “Transfer” to move the required currency.
              
  3. Select an account to transfer from and select the Derivatives account to transfer into.
  4. Enter the amount and press the Transfer button.

To Begin Trading:

  1. Go to the Futures Page
  2. You will need to assign the currency you’d like to be able to trade for a futures contract, this will act as the collateral.

Select the button on the top banner to set up the amount of leverage you would like to use.  (remind them that CrossTower uses Isolated Margin and link them to the Isolated Margin page to learn more).

                 

  1. Choose the Perpetual contract, select the amount of funds to designate for margin trading and the amount of leverage you wish to use, and press Transfer.
  2. You are all set to begin trading using the Long/Short trading widget on the Futures page.

               

The following data is calculated by the system:

  • Position – the desired currency amount to sell or buy (from the Amount field).
  • Buying power – the currency amount available for spending.
  • In orders – the currency amount reserved for the current orders.
  • Best bid/ask – the best price for this side in the Market Depth.
  • Price– liquidation price. When the currency pair price on the market reaches this value, the contract will be automatically liquidated (see the Liquidation paragraph below).
  • If the futures contract price will be lower than Liq. Price, the part 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 – enables to set the position volume as a percentage of Buying Power.
  • Total – the desired currency amount to receive or spend in the to trade.
  1. Orders and Trades entered can be found in the My Orders and Trades widget.   
      
  1. You can change the contract Leverage after its creation 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 relevant currency pair volume-weighted average price in the futures market at the time of the contract's creation.
  • Price – liquidation price. When the currency pair price on the market reaches this value, the contract will be automatically liquidated (see the Liquidation paragraph below).
    If the futures contract price turns out to be lower than the Liq. Price, the part 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 selected leverage, the less price movement would need to happen in an unfavorable (for the trader) direction for the liquidation to occur
  • Unr. P&L (Unreleased Profit and Loss)– a profit or loss that a trader receives or incurs if he or she closes the contract by the current mark price by clicking the Close button.
  • P&L (Profit and Loss)– a real profit or loss by this contract when the contract was partially executed.

P&L = (Trade Price – Entry Price) * Quantity

  • ADL (Auto-Deleveraging)– a feature that covers the losses of some traders by the profits of others.

When a significant price movement occurs, some users may not have enough margin collateral to cover their losses. This is when the ADL mechanism starts.

The indicator (from 0 to 4) shows how likely it is that the position will be used in the ADL procedure. So, if all indicator cells are active near the contract position, and there is a market situation when the liquidation loss cannot be covered, this contract will be automatically used to cover the losses of the opposite side.

In fact, this feature rarely kicks in.

  • Margin– margin collateral for this position.
  1. The list of completed trades is located on the My trades tab.

OHLCV Chart Features

For perpetual futures, additional details can be found on the chart as well.
      

  • Mark price– the price on the basis of which the decision to liquidate the position is made: the marked price is compared with the liquidation price.
    The marked price is calculated based on the index price using the formula below.

    Mark Price = Index Price + Bfair– "fair basis".
    Bfair = Index Price * Funding Rate * (t/T)
    t — the time remaining until the next funding period,
    T — funding interval (8 hours)
  • Index – index price of the selected currency pair. It is calculated based on the data from several other exchange platforms.
  • 24 High/24 Low – max/min prices during the period.
  • Funding Rate – the rate for the funding calculation. The detailed calculation is noted above in the Perpetual futures operation principles
  • Countdown – the funding counter. When the value drops to zero, payments or deductions of funding will be made, and the counter will restart.
  • Open int (Open interest) – the total currency volume in opened contracts on the market.

 

Liquidation

If the currency pair price on the market (Mark Price) will be the same as Liq. Price for a certain contract, this contract will be liquidated.

An attempt will be made to close the contract at the current market price:

  1. Part of the margin collateral will be used to cover the loss.
  2. If there is a surplus of the margin collateral, it will be returned to the user.
  3. If the loss cannot be covered by margin collateral, the position will be given to Insurance Fund (internal platform mechanism).
  4. If the Insurance Fund is unable to process the position, the ADL mechanism can be applied to the opposite market side.

The liquidation mechanism also takes potential funding and penalties into account. So, if the Funding Rate has increased, and a high Leverage is used, when the user does not have enough collateral to deduct funding, the position can also be liquidated. Upon liquidation, a certain amount of penalty is debited from the user (0.3% of the position volume).

To avoid liquidation, the user can either close the contract before the liquidation occurs or increase the margin collateral for this contract:

Margin Modes for Futures Trading

There are 2 types of margin modes that platforms can offer – Isolated and Cross Margin. 

The isolated Margin is on a position-by-position basis.  Isolated Margin will set and require margin amounts for each position held by a perpetual futures contract.  Example:  Holding a futures position in BTC/USD and ETH/USD would require you to have specific margin amounts for the position in BTC/USD and separately for the position in ETH/USD. 

Cross Margin allows the margin to be shared between different open positions in the same account.  In the same example of holding a position in both a BTC/USD and ETH/USD future, under cross margin, only 1 margin requirement would be needed.

The CrossTower platform only supports Isolated Margins today.

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