This article explains the key concepts and frequently asked questions about Echobit USDT-M Futures, including contract basics, order types, margin modes, liquidation, funding, and risk management.
Q1: What are USDT-M Perpetual Futures?
USDT-M Perpetual Futures are crypto derivatives that allow you to trade the price movements of an underlying asset without an expiry or settlement date.
Since there is no expiration, you can hold positions indefinitely as long as you meet the required margin requirements. USDT-M Perpetual Futures support both long and short positions, as well as leveraged trading.
Q2: What futures products does Echobit support?
Echobit supports Linear USDT-M Perpetual Contracts only.
- Quoted in: USDT
- Settled in: USDT
- PnL & fees: generally calculated/settled in USDT
This structure is often more straightforward because profits and losses are directly reflected in USDT.
Q3: Key trading terms (Base / Quote / Settlement)
- Base Currency: the underlying asset being traded (e.g., BTC in BTCUSDT).
- Quote Currency: the currency used to quote the price (USDT).
- Settlement Currency: the currency used to settle PnL and fees (USDT on Echobit USDT-M).
Q4: What are Long and Short?
- Long (Buy): You expect the price to rise. If it rises, you profit; if it falls, you may incur losses.
- Short (Sell): You expect the price to fall. If it falls, you profit; if it rises, you may incur losses.
Q5: What is leverage?
Leverage allows you to open a larger position with less margin. It amplifies both potential profits and potential losses. In general, higher leverage means:
- lower initial margin requirement,
- but higher liquidation risk (less buffer against adverse price moves).
Q6: What is Initial Margin?
Initial Margin (IM) is the minimum margin required to open a position.
A common simplified form is:
$$\text{Initial Margin} \approx \frac{\text{Position Value}}{\text{Leverage}} + \text{Fees (as applicable)}$$
Actual requirements depend on the contract specifications and current fee settings.
Q7: What is Maintenance Margin?
Maintenance Margin (MM) is the minimum margin you must maintain to keep a position open. If your margin balance falls below the maintenance margin requirement, your position may be liquidated.
A common simplified form is:
$$\text{Maintenance Margin} = \text{Position Value} \times \text{Maintenance Margin Rate} + \text{Fees (as applicable)}$$
Q8: What is liquidation?
Liquidation occurs when the margin balance of your position is no longer sufficient to meet the maintenance margin requirement.
Important points:
- Your margin balance typically includes unrealized PnL.
- Unrealized PnL for risk checks is commonly calculated using the Mark Price (not necessarily the latest traded price).
- When the Mark Price reaches your liquidation threshold (the “liquidation price”), your position may be forced into liquidation.
Q9: What is Mark Price?
Mark Price is a reference price used for risk control, especially liquidation calculations.
It is designed to reduce unnecessary liquidations caused by short-term volatility or abnormal trades by using a fairer price reference than the latest trade alone.
Q10: Why use Mark Price instead of Latest Price for liquidation checks?
Using Mark Price can help:
- reduce liquidation caused by temporary spikes,
- prevent manipulation of the latest traded price,
- keep risk calculations more stable during volatility.
Q11: What is Funding Fee (Funding Rate)?
Perpetual contracts may use a funding mechanism to help anchor the perpetual price to the underlying spot market.
Depending on the funding rate:
- longs may pay shorts, or
- shorts may pay longs
Funding can affect your margin balance over time, and in extreme cases may contribute to liquidation risk.
Funding rules (frequency and calculation) are displayed on the trading interface for each contract.
Q12: What margin modes does Echobit support?
Echobit supports both:
- Isolated Margin: margin is allocated to a specific position. Risk is more contained to that position’s margin.
- Cross Margin: available balance in your futures account can be shared across positions (within the same account scope). This can reduce liquidation risk for a single position, but it may increase the risk of broader account losses.
Q13: What order types are supported on Echobit Futures?
Echobit supports four order types for USDT-M perpetual contracts:
- Limit Order: Executes only at your specified price or better.
- Market Order: Executes immediately at the best available prices in the order book (slippage may occur).
- Trigger Order: Submitted only after the market reaches a preset trigger condition. After triggering, it executes as a limit or market order based on your settings.
-
Sliced Order: Splits a large order into smaller orders and executes them in parts to help reduce market impact under certain conditions.
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Risk Disclaimer
Cryptocurrency investments are subject to high market risk and price volatility. You should only invest in products that you are familiar with and fully understand the associated risks.
Before making any investment decisions, please carefully assess your investment experience, financial situation, investment objectives, and risk tolerance, and consider seeking advice from an independent financial advisor.
The information provided in this document is for informational purposes only and should not be considered financial, investment, or trading advice. Past performance is not indicative of future results. The value of your investments may fluctuate, and you may lose part or all of your invested capital.
You are solely responsible for your investment decisions. Echobit shall not be liable for any losses or damages arising from your investment activities.