Futures

Bitget USDT-M Futures guide

2024-11-11 10:58053

In the cryptocurrency industry, futures trading is typically divided into two categories: USDT-M Futures and Coin-M Futures. Bitget offers USDT-M Futures, Coin-M Perpetual Futures, and Delivery Futures. This article provides an in-depth overview of USDT-M Futures, including relevant terminology and concepts.

1. Definition and basics of USDT-M Futures

USDT-M Futures, also known as forward futures, are futures settled in USDT. Examples include BTCUSDT and ETHUSDT, where investors fund their futures accounts with USDT. Gains or losses are settled in USDT, regardless of whether users go long or short on the crypto asset. This type of futures is also known as perpetual futures, allowing investors to hold positions indefinitely.

Each futures contract specifies a base currency, which determines the delivery quantity. For example, the BTCUSDT futures contract, with BTC as the base currency, represents one unit of Bitcoin, similar to trading units in the spot market. The USDT-M Futures uses the index price, typically derived from the spot price of the asset in terms of USDT. The index price is essential for pricing futures contracts and assessing market conditions.

2. Trading parameters

When trading Bitget USDT-M Futures, investors should consider the following:

1. Leverage

Bitget offers a range of leverage options, typically from 5x, 10x, 20x, 50x, to 100x, depending on the cryptocurrency. For example, Bitget's BTCUSDT USDT-M perpetual futures offer leverage between 1x and 125x.

Investors should choose their leverage level carefully, considering their risk tolerance and trading strategy. Higher leverage can lead to greater returns but also carries significant risks, potentially resulting in rapid losses or liquidation during unfavorable market fluctuations.

2. Margin:

Before trading, investors must deposit a specified amount of USDT into their futures account as margin to facilitate transactions. The margin amount depends on the chosen leverage, position size, and current market conditions.

Bitget calculates the required margin based on a set margin ratio. For instance, if an investor wishes to engage in margin trading with 10 Bitcoins and selects a leverage of 10x, they would only need to provide 1 Bitcoin as margin to trade at the scale of 10 Bitcoins.

3. Transaction fees:

Transaction fees apply to each USDT-M Futures transaction and are paid to the trading platform. Typically, fees are charged for both opening and closing positions. Some platforms may also impose an overnight holding fee if positions are kept open overnight.

Bitget's transaction fees vary based on the user's VIP level. Click here for more details.

3. Futures terms

USDT-M Perpetual Futures have no expiry date, allowing investors to hold positions indefinitely, unless they manually close them or face liquidation due to insufficient margin.

These contracts also incur a funding fee, which is paid between investors every eight hours. At Bitget, funding fee settlements occur at 12:00 AM, 8:00 AM, and 4:00 PM (UTC+8). The funding fee rate is calculated based on several factors, including the spread between futures prices and index prices, as well as the long/short position ratios. For more details, check the Bitget Fee Schedule. The countdown indicates the time remaining until the next funding rate adjustment.

4. Order rules

1. Minimum notional value limit: Each order must meet the minimum notional value limit set by the exchange. At Bitget, this minimum is 5 USDT per order. Orders with a notional value below this threshold will be rejected.

For instance, if a user opens a 0.001 BTC position worth more than 5 USDT based on the current market price, it will proceed. However, a 0.001 BGB order worth less than 5 USDT will be rejected.

2. Maximum order size: Bitget sets a maximum order size based on cryptocurrencies and market conditions to prevent excessive market impact from large trading volumes and to manage user risk. For example, the maximum single order size for BTC/USDT futures might be 100 BTC, while for ETH/USDT futures, it could be 2000 ETH.

3. Reduce-only orders: These orders are exempt from the minimum notional size limits and other rules, and are intended for scenarios where users wish to partially close a position, rather than exit entirely, due to unfavorable market conditions.

5. Risk control and liquidation mechanism

1. Risk ratio calculation: Bitget calculates a user's risk ratio based on factors such as margin, position value, and current market conditions. As a critical indicator of account risk, the risk ratio is calculated as follows: Risk ratio = (margin + unrealized PnL) ÷ position value × 100%.

2. Liquidation alert: When a user's risk ratio falls to a certain level, Bitget will send a liquidation alert, prompting users to add more margin or adjust their positions.

3. Liquidation: If no action is taken after the alert and the risk ratio drops below the platform's preset liquidation threshold, the liquidation system will be triggered. The platform will close the user's positions at the best market price to minimize losses and market impact. The liquidation threshold typically ranges between 20% and 50%.

6. Risk warning and education

As a leading crypto exchange, Bitget is committed to user education and provides various product-related tutorials. There is a dedicated risk education section for USDT-M Futures, helping investors understand trading rules, risk characteristics, and risk management strategies. In addition, Bitget regularly publishes educational articles and hosts online training sessions to further support users.

7. Special circumstances

1. Extreme market conditions: During extreme market conditions, such as sharp price fluctuations or liquidity shortages, the platform may temporarily adjust leverage levels, increase margin requirements, or restrict trading to lower market risk and protect investor interests. Users should stay updated by monitoring platform announcements regarding these temporary measures.

2. System issues and technical problems: If technical issues, such as system failures or network interruptions, prevent normal trading, Bitget will work to resolve the issues promptly and may offer compensation to affected users where appropriate. Users experiencing such issues should contact customer service for assistance and solutions.