Perpetual contracts are standardized, so it is important to understand the specifications of perpetual contracts before trading.
Each perpetual contract usually includes contract symbol, settlement crypto, contract size, tick size, leverage, funding interval(funding fee settled), mark price, and insurance fund size, a total of 8 specifications. Among them:
Contract symbol is the trading pair naming code of the perpetual contract you intend to trade. Take BTCUSDT as an example: BTC is the underlying asset of the perpetual contract, and USDT is the settlement crypto.
Settlement crypto is the cryptocurrency in which perpetual contract profits and losses are denominated, and the cryptocurrency you can use as perpetual contract margin. When you close your position, your profits and losses are settled in settlement crypto. For example, the settlement crypto for the BTCUSDT perpetual contract is USDT.
Contract size is the notional value of each contract. Generally speaking, the larger the contract's notional value, the more margin is required. The exchange defines the contract size to meet the needs of market participants. Taking BTCUSDT as an example, if the contract size is 0.001 BTC, the contract's notional value is 0.001 BTC, and users only need to pay the margin that matches the notional value to open a position.
Tick size is the minimum change in the contract price. Taking BTCUSDT as an example, if the tick size of the contract is 0.5, then every time the price changes, the size is not less than $0.5.
Leverage is the ratio of your contract's nominal value to your margin's value. The lower the margin value you use, the higher the leverage. Take BTCUSDT as an example. This perpetual contract supports up to 125x margin, which means that at the highest leverage, you only need a margin equivalent to 0.8% of the nominal value of the contract to open a position.
Funding interval (funding fee settled) is a fixed time for each perpetual contract to pay or receive funding fees. The funding rate is usually paid or received three times a day to match the three major markets of North America, Europe, and Asia. Taking BTCUSDT as an example, the funding rate payment time for this contract is 8:00, 16:00, and 24:00 HKT every day, which means that you will pay or receive funding fees to your counterparty at these three times. For "funding fees," please refer to the contract information.
Mark price is the index price of the underlying asset hooked to the perpetual contract. Taking the BTCUSDT perpetual contract as an example, the mark price is 30,000 USDT, which means that the BTC index price is 1 BTC = 30,000 USDT. The index price is obtained by weighted averaging of underlying prices from multiple sources to ensure price fairness and stability.
Insurance fund is the reserve fund used to deal with risk events such as "margin calls." The size of the insurance fund is calculated and updated in real time, and its size is affected by factors such as time lapse and risk events. For information about the "insurance fund," please refer to the contact information.