Perpetual Trading Glossary

Perpetual Trading

Perpetual Trading is a type of trading where positions are held indefinitely, with no set expiry or settlement date. Futures trading is carried out using perpetual contracts.

Leverage

Leverage is using borrowed funds to increase the potential return on investment. This allows traders to take larger positions with a small number of assets on balance.

Margin

Margin is the number of funds a third party requires from a trader or investor to open and maintain a leveraged trading position.

There are several modes of margin trading:

• Isolated margin is a helpful mode for traders who want to limit the potential losses on a specific trading position. Simply put, the margin requirements are set for each position rather than using the trader’s entire account balance as a collater for all positions.

• Cross margin is contrary to isolated margin. In this mode, a trader’s entire balance is used as collateral for all positions, and cross-margining aggregates all open positions to determine the margin required.

• Margin Ratio is the amount of collateral required to maintain an open position. In other words, the higher the margin ratio, the lower the amount of leverage being used, and the lower the risk of liquidation as the position moves against the trader.

• Maintenance Ratio is the minimum margin ratio a trader must maintain to keep an open position.

• Margin Balance is the amount of collateral a trader has deposited to open and maintain their positions in a perpetual contract.

Actions & Assets

• Deposit is an option for a trader to contribute capital to an account.

• Withdraw is an option for a trader to pull out of the capital from the account to the wallet.

• Balance displays the number of funds deposited, commission, and released profit on your account.

• Unrealized PNL (Profit and Loss), also known as “floating PNL”, is the profit or loss a trader would realize if they were close to their position at the current market price.

Modes

• Single Asset Mode is a feature in perpetual trading that allows traders to use their margin balance to open positions in multiple contracts on the same underlying asset. This means that a trader can open multiple positions on the same asset without allocating additional margin for each position.

• Multi-Assets Mode is a feature in perpetual trading that allows traders to use their margin balance to open positions in multiple contracts on different underlying assets.

Orders

• Buy/Long – an order that a trader sells to make a profit when the price of an asset rises.

• Sell/Short – an order that obliges a trader to borrow an asset, sell it, and repurchase it in the future when the price drops.

• Limit Order – an order that aims to reach the set or better price of the asset before it is executed.

• Market Order – an order immediately executed at the asset's current price when the user places it.

• Stop Limit Order – a risk mitigation option consisting of a stop loss and a limit order. In this way, traders can control the execution of their order, but its execution isn’t guaranteed and can be canceled.

• Stop Market Order – an order to buy or sell a security at the market price when the price reaches a certain level, known as the stop price. This type of order is typically used to limit potential losses or to take advantage of potential gains in a volatile market.

• Reduce Only – an option that will reduce your position.

• TP/SL – Take Profit / Stop Loss.

• GTC (Good Till Cancel) – the order status remains active until it is completed or canceled.