How to Trade
- You can place orders by pressing the
Sell/Shortbuttons on the Trade dashboard.
- When you place an order, the system will check if you have enough Available Balance to keep the Initial Margin. If you have an existing position, the system will also check if you have enough available balance to cover the change in Maintenance Margin and PNL when the position is priced at the order price. If you have enough funds, the order will be allowed to place.
- Net active orders that have not been filled or canceled will reduce the available balance by the initial margin of those net orders.
Margin and PNL
Before you start trading, you have to deposit Bitcoin or USDT to fund your margin account. All margins and PNL are handled in Bitcoin Or USDT at BaseFEX. You should first check the Margin Terminology.
Futures and Perpetual Contracts
Here are some rules about Initial Margin:
- For Buy/Long orders,
required Initial Margin = (IM * Contracts * Limit Bid Price * Multiplier). The commission is reserved using the limit bid price. But the actual commission paid will be calculated based on the final execution price.
- For Sell/Short orders,
required Initial Margin = (IM * Contracts * Max (Limit Offer Price, Best Bid) * Multiplier). The commission is reserved using the limit offer price or the best bid for that contract, which is higher. The actual commission paid will be calculated based on the final execution price.
- You will not be charged the initial margin if your order will reduce your position size.
- If you have both Buy/Long and Sell/Short orders in the market, the Initial Margin will only be charged on the net amount of Buy/Long orders (
Buy orders - Sell orders). The Sell/Short orders will still be charged the initial margin unless they reduce the current position size. For example, if you bid to buy 20 contracts for $100 and offer to sell 15 contracts for $150, you will only be charged the initial margin on your net bids of 5 contracts (
20 - 15) and on your offers of 15 contracts.
- If a contract uses Fair Price Marking, the Initial Margin will be calculated differently. If a Buy/Long order is placed above the mark price, or if a Sell/Short order is placed below the mark price, then you must fully fund the difference between the order price and the mark price. For example, if the mark price is $100 and you submit a Buy/Long order for 10 contracts at $110, then the initial margin required =
(IM * 10 contracts * $110 * Multiplier) + (100% * 10 contracts * ($110 - $100) * Multiplier).
Maintenance Margin (MM) is calculated based on the Mark Price of that contract.
For all positions,
required Maintenance Margin = (MM * Contracts * Mark Price * Multiplier). The amount of commission applicable to close out all your positions will also be added to your maintenance margin requirement. This is the minimum amount of margin you must maintain to avoid liquidation on your position.
Funding and Settlement
- Perpetual Contracts at BaseFEX are subject to Funding. You can check specific Contract Specifications and Funding History for further information.
- When the settlement occurs, the position will be closed at the settlement price.
- The Perpetual Contract does not settle at any time, so settlement fees are not applicable here.
- If your contract has expired, the lifetime profit and loss of that contract will be added to your Bitcoin balance, and this contract will no longer be on the Position Section.
- All calculations done at BaseFEX are final.
Market Disruption Event (MDE)
- If an exchange that contributes to the Index Price experiences an outage, BaseFEX might declare an MDE and will inform you how the settlement or expiry date of related contracts will be changed.
- You will receive an e-mail announcement, and the declaration of an MDE will be displayed on the Trade dashboard.
- The declaration of an MDE is at the full discretion of BaseFEX, and all decisions here are final.
Frequently Asked Questions
How much leverage does BaseFEX offer?
BaseFEX offers different amounts of leverage for different products.
Leverage is determined by the Initial Margin and Maintenance Margin levels. These levels specify the minimum equity you must hold in your account to enter and maintain your positions. Leverage is not a fixed multiplier but rather a minimum equity requirement. You can see the minimum Initial Margin and Maintenance Margin levels for all products at Risk Limits.
BaseFEX offers leverage on each of its products, and the highest leverage offered at BaseFEX is up to 100x, such as the BTC/USD Perpetual Contract.
What is Initial Margin?
Initial Margin is the minimum amount of Bitcoin or USDT you must deposit to open a position.
What is Maintenance Margin?
Maintenance Margin is the minimum amount of Bitcoin or USDT you must hold to keep your position open. Once your margin balance on BaseFEX falls below this level, your position will be liquidated automatically.
Why would I be liquidated?
If the Mark Price of your contract falls below your liquidation price for Long position, or it rises above your liquidation price for Short position, your Maintenance Margin level will be broken, and the system will take over the position instead. You can check your liquidation price in Trade History, where your liquidated position is closed at the Bankruptcy Price (which means your Maintenance Margin is equal to 0).
How does a Liquidation happen?
Once your position is going to be liquidated, the system will try to close the position at the prevailing market price. However, if the system fails to liquidate that position, then our Liquidation Insurance Fund comes to handle.
What is Insurance Fund?
The Insurance Fund is created to take on the unfilled liquidation orders before they are handled by the Auto-Deleveraging system.
Our Insurance Fund comes from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that particular position.
What is Auto-Deleveraging?
Auto-Deleveraging happens when a liquidation remains unsettled in the market. Those who hold opposite positions will be closed according to leverage and priority based on the profits.
Does BaseFEX charge fees on Auto-Deleveraging?
No. BaseFEX does not charge any fees during the process of Auto-Deleveraging.
Will I get bankrupted?
No. BaseFEX has established a profound mechanism to protect the funds of our users. Your margin balance on the platform will never fall below 0.
Will BaseFEX socialize losses?
No. Since we have our Auto-Deleveraging mechanism, we do not need to socialize the losses further.