How to do Futures Trading on BloFin

What are Perpetual Futures Contracts?

A futures contract is a legally binding agreement between two parties to buy or sell an asset at a predetermined price and date in the future. These assets can vary from commodities like gold or oil to financial instruments such as cryptocurrencies or stocks. This type of contract serves as a versatile tool for both hedging against potential losses and securing profits.

Perpetual futures contracts, a subtype of derivatives, enable traders to speculate on the future price of an underlying asset without actually owning it. Unlike regular futures contracts with set expiration dates, perpetual futures contracts do not expire. Traders can maintain their positions for as long as they desire, allowing them to capitalize on long-term market trends and potentially earn substantial profits. Additionally, perpetual futures contracts often feature unique elements like funding rates, which help align their price with the underlying asset.

One distinctive aspect of perpetual futures is the absence of settlement periods. Traders can keep a position open for as long as they have sufficient margin, without being bound by any contract expiry time. For instance, if you purchase a BTC/USDT perpetual contract at $30,000, there is no obligation to close the trade by a specific date. You have the flexibility to secure your profit or cut losses at your discretion. It’s worth noting that trading perpetual futures is not allowed in the U.S., although it constitutes a substantial portion of global cryptocurrency trading.

While perpetual futures contracts offer a valuable tool for gaining exposure to cryptocurrency markets, it’s essential to acknowledge the associated risks and exercise caution when engaging in such trading activities.

Explanation of Terminology on the Futures Trading Page on BloFin

For beginners, futures trading can be more complex than spot trading, as it involves a greater number of professional terms. To help new users understand and master futures trading effectively, this article aims to explain the meanings of these terms as they appear on the BloFin futures trading page.

We will introduce these terms in order of appearance, starting from left to right.

Terms above the K-line chart

Perpetual: "Perpetual" denotes continuity. The commonly seen "perpetual futures" (also known as perpetual futures contracts) evolved from traditional financial futures contracts, with the key difference being that perpetual futures have no settlement date. This means that as long as the position is not closed due to forced liquidation, it will remain open indefinitely.

Index Price: The comprehensive price index obtained by referencing the prices of major mainstream exchanges and calculating the weighted average of their prices. The index price displayed on the current page is the BTC index price.

Mark Price: The real-time fair price of the futures, calculated based on the index price and market price. It is used to calculate the floating PNL of positions and determine position liquidation. It may deviate from the last price of the futures to avoid price manipulation.

Funding Rate: The funding rate in the current stage. If the rate is positive, long-term holders pay the funding fee to short-term holders. If the rate is negative, short-position holders pay the funding fee to long-position holders.

Terms in the order book area

Order Book: A window to observe market trends during the trading process. In the order book area, you can observe each trade, the proportion of buyers and sellers, and more.

 

Terms in the trading area

Open Long: When you predict that the token price will rise in the future and open a position based on this trend, it is known as opening a long position.

Open Short: When you predict that the token price will fall in the future and open a position based on this trend, it is known as opening a short position.

Margin and Margin Mode: Users can engage in futures trading after depositing a certain percentage of funds as financial collateral. This fund is known as margin. The margin mode is divided into isolated margin or cross margin.

Isolated: In isolated margin mode, a certain amount of margin is allocated to a position. If the margin for a position decreases to a level below the maintenance margin, the position will be liquidated. You can also choose to add or reduce margin to this position.

Cross: In cross margin mode, all positions share the cross margin of the asset. In the event of liquidation, the trader may lose all the margin and all positions under the cross margin of that asset.

Order Types: The order types are divided into limit order, market order, trigger order, trailing stop order, and post-only order.

• Limit: A limit order is an order placed to buy or sell at a specific price or better. However, a limit order’s execution isn’t guaranteed.

• Market: A market order is an order placed to buy or sell quickly at the best available price in the market.

• Trigger: For trigger orders, users can set a trigger price, order price, and quantity in advance. When the market price reaches the trigger price, the system will automatically place an order at the order price. Before the trigger order is triggered successfully, the position or margin will not be frozen.

• Trailing Stop: A trailing stop order is submitted to the market based on the user’s settings as a strategic order when the market is in a retracement. Actual Trigger Price = Market’s Highest (Lowest) Price ± Trail Variance (Price Distance), or Market’s Highest (Lowest) Price * (1 ± Trail Variance). At the same time, users can set the price at which the order is activated before the trigger price is calculated.

• Reduce-only: Reduce-only orders allow traders to execute buy or sell orders which only reduce a current position, as opposed to opening an opposite long or short worth more than the existing value of your assets, letting you trade without the risk of over-exposing your positions.

• TP/SL: A TP/SL order is an order with preset trigger conditions (take profit price or stop-loss price). When the last price / fair price / index price reaches the preset trigger price, the system will close the position at the best market price, based on the preset trigger price and quantity. This is done to achieve the goal of taking profit or stopping losses, allowing users to automatically settle the desired profit or avoid unnecessary losses.

• USDT-M: USDT-margined futures provided by BloFin is a linear contract, which is a linear derivative product quoted and settled in USDT, a stablecoin pegged to the value of the US dollar.

 

Terms in the order area below the K-line chart

1. Position Tab: This shows all positions you are holding

2. Order History: It includes the orders which are canceled, fully filled and partially filled. You can view detailed information here about the end time, side, order price, quantity, fill price, close reason and source.
3. Open Orders: show all the pending orders.

How to Trade USDT-M Perpetual Futures on BloFin (Website)

1. Go to the BloFin Website, click and select [Futures].

2. On the left-hand side, select BTC/USDT as an example from the list of futures.


3. Click on the following part. Here, you can click on Isolated or Cross to choose your [Margin Mode]. After that, click [Confirm] to save your change.

The platform supports traders with different margin preferences by offering different margin modes.

• The Cross Margin: All cross positions under the same margin asset share the same asset cross margin balance. In the event of liquidation, your assets full margin balance along with any remaining open positions under the asset may be forfeited.
• The Isolated Margin: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.

4. Click on the following part, here you can adjust the leverage multiplier by clicking on the number.

After that, click [Confirm] to save your change.


5. To initiate a fund transfer from the spot account to the futures account, click on the small arrow button located on the right to access the transfer menu.

Once in the transfer menu, enter the desired amount you wish to transfer, and click on [Confirm].


6. To open a position, users have three options: Limit Order, Market Order, and Trigger Order. Follow these steps:

Limit Order:

• Set your preferred buying or selling price.
• The order will only be executed when the market price reaches the specified level.
• If the market price doesn’t reach the set price, the limit order remains in the order book, awaiting execution.

Market Order:

• This option involves a transaction without specifying a buying or selling price.
• The system executes the transaction based on the latest market price when the order is placed.
• Users only need to input the desired order amount.

Trigger Order:

• Set a trigger price, order price, and order quantity.
• The order will only be placed as a limit order with the predetermined price and quantity when the latest market price hits the trigger price.
• This type of order provides users with more control over their trades and helps automate the process based on market conditions.

7. After placing your order, view it under [Open Orders] at the bottom of the page. You can cancel orders before they’re filled.

How to Trade USDT-M Perpetual Futures on BloFin (App)

1. Open your BloFin App, on the first page, tap on [Futures].


2. To switch between different trading pairs, tap on [BTC/USDT] located at the top left. You can then utilize the search bar for a specific pair or directly select from the listed options to find the desired futures for trading.

3. Click on the following part. Here, you can click on Isolated or Cross to choose your [Margin Mode]. After that, click [Confirm] to save your change.

The platform supports traders with different margin preferences by offering different margin modes.

• The Cross Margin: All cross positions under the same margin asset share the same asset cross margin balance. In the event of liquidation, your assets full margin balance along with any remaining open positions under the asset may be forfeited.
• The Isolated Margin: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.

4. Click on the following part, here you can adjust the leverage multiplier by clicking on the number.

After that, click [Confirm] to save your change.


5. Choose your order type by tapping on the following.


6. On the left side of the screen, place your order. For a limit order, enter the price and amount; for a market order, input only the amount. Tap [Buy (Long)] to initiate a long position, or [Sell (Short)] for a short position.

7. Once the order is placed, if it isn’t filled immediately, it will appear in [Open Orders].

BloFin Future Trading Modes

Position Mode

(1) Hedge Mode

• In Hedge Mode, users are required to explicitly indicate whether they intend to open or close a position when placing an order. This mode allows users to hold positions simultaneously in both long and short directions within the same futures contract. The leverages for the long and short positions are independent of each other.

• All long positions are aggregated, and all short positions are combined within each futures contract. When maintaining positions in both long and short directions, the positions must allocate the corresponding margin based on the specified risk limit level.

For instance, in BTCUSDT futures, users have the flexibility to open a long position with 200x leverage and a short position with 200x leverage concurrently.

(2) One-Way Mode

• In One-Way Mode, users are not required to specify whether they are opening or closing a position when placing an order. Instead, they only need to specify whether they are buying or selling. Additionally, users can only maintain positions in a single direction within each futures contract at any given time. If holding a long position, a sell order will automatically close it once filled. Conversely, if the number of filled sell orders surpasses the number of long positions, a short position will be initiated in the opposite direction.
   

Margin Modes

(1) Isolated Margin Mode

• In Isolated Margin Mode, the potential loss of a position is limited to the initial margin and any additional position margin used specifically for that isolated position. In the event of liquidation, the user will only incur losses equivalent to the margin associated with the isolated position. The available balance of the account remains untouched and is not utilized as additional margin. Isolating the margin used in a position allows users to restrict losses to the initial margin amount, which can be beneficial in cases where a short-term speculative trading strategy doesn’t pan out.

• Users can manually inject additional margin into isolated positions to optimize the liquidation price.

(2) Cross-Margin Mode

• Cross Margin Mode involves using the entire available balance of the account as margin to secure all cross positions and prevent liquidation. In this margin mode, if the net asset value falls short of meeting the maintenance margin requirement, liquidation will be triggered. If a cross position undergoes liquidation, the user will lose all assets in the account except for the margin associated with other isolated positions.
   

Modifying Leverage

• Hedge mode allows users to employ different leverage multipliers for positions in the long and short directions.
• Leverage multipliers can be adjusted within the permitted range of the futures leverage multiplier.
• Hedge mode also permits the switching of margin modes, such as transitioning from isolated mode to cross-margin mode.

Note: If a user has a position in cross-margin mode, it cannot be switched to isolated-margin mode.

Frequently Asked Questions (FAQ)

How do perpetual futures contracts work?

Let’s take a hypothetical example to understand how perpetual futures work. Assume that a trader has some BTC. When they purchase the contract, they either want this sum to increase in line with the price of BTC/USDT or move in the opposite direction when they sell the contract. Considering that each contract is worth $1, if they purchase one contract at the price of $50.50, they must pay $1 in BTC. Instead, if they sell the contract, they get $1’s worth of BTC at the price they sold it for (it still applies if they sell before they acquire).

It is important to note that the trader is purchasing contracts, not BTC or dollars. So, why should you trade crypto perpetual futures? And how can it be certain that the contract’s price will follow the BTC/USDT price?

The answer is via a funding mechanism. Users with long positions are paid the funding rate (compensated by users with short positions) when the contract price is lower than the price of BTC, giving them an incentive to purchase contracts, causing the contract price to rise and realign with the price of BTC/USDT. Similarly, users with short positions can purchase contracts to close their positions, which will likely cause the price of the contract to increase to match the price of BTC.

In contrast to this situation, the opposite occurs when the price of the contract is higher than the price of BTC - i.e., users with long positions pay users with short positions, encouraging sellers to sell the contract, which drives its price closer to the price of BTC. The difference between the contract price and the price of BTC determines how much funding rate one will receive or pay.

 

What is BloFin Futures Bonus and How does it Work?

BloFin futures bonus is a reward given to users through various marketing activities, promotions, and campaigns. The BloFin futures bonus allows you to try out BloFin futures trading in the real market with zero risk.
 
Is futures bonus the same as receiving cryptocurrency or money?
No. Futures bonus is complimentary funds sent to your account. It can only be used to trade futures. Futures bonus cannot be transferred to your funding account or used for withdrawals. Profits generated from futures bonus can be withdrawn.
All futures bonus can expire after a predesignated time. The retrieve of futures bonus will then start.
 
How to find and claim your futures bonus?
Once claimed, the futures bonus will automatically go to your futures account.
 
How to use futures bonus?
Suppose you have received futures bonus issued to you in your futures account. You can then open USDT-M positions to use your futures bonus.
If you close a position with profits, you can keep, transfer, or withdraw the realized profits. However, please note that any operation to transfer or withdraw token assets will invalidate all futures bonuses in or available to your account immediately. Unclaimed futures bonuses in the Welcome Bonus Center will also be revoked.
 
 
Rules of Use

• Futures bonus can only be used for trading futures in BloFin;
• Futures bonus cannot be moved, withdrawn, or used for any other purpose outside futures account.
• Transfer or withdraw of token assets will trigger the retrieve of all futures bonuses;
• Futures bonus can be used to offset 100% futures trading fees, 50% losses/funding fees;
• Futures bonus can be used as a margin to open a position;
• When both of the following conditions are met, your maximum leverage is 5x:
  • Your total deposit is less than $30 
  • Your total deposit is less than half of your futures bonus
• Futures bonus will always expire after a predesignated time. The default futures bonus validity period is 7 days. Validity periods can be varied according to different campaigns. BloFin reserves the right to adjust the periods based on the campaign terms and conditions.
• After transferring assets out from futures account, the available amount should be no less than the total futures bonuses.
• If we detect any cheating behavior, your account can be temporarily banned for withdrawal.
• BloFin reserves the right to change the terms and conditions of this program at any time.

 

What are the differences between perpetual futures contracts and margin trading?

Perpetual futures contracts and margin trading are both ways for traders to increase their exposure to the cryptocurrency markets, but there are some key differences between the two.

• Timeframe: Perpetual futures contracts do not have an expiration date, while margin trading is typically done over a shorter timeframe, with traders borrowing funds to open a position for a specific period of time.
• Settlement: Perpetual futures contracts settle based on the index price of the underlying cryptocurrency, while margin trading settles based on the price of the cryptocurrency at the time the position is closed.
• Leverage: Both perpetual futures contracts and margin trading allow traders to use leverage to increase their exposure to the markets. However, perpetual futures contracts typically offer higher levels of leverage than margin trading, which can increase both potential profits and potential losses.
• Fees: Perpetual futures contracts typically have a funding fee that is paid by traders who hold their positions open for an extended period of time. Margin trading, on the other hand, typically involves paying interest on the borrowed funds.
• Collateral: Perpetual futures contracts require traders to deposit a certain amount of cryptocurrency as collateral to open a position, while margin trading requires traders to deposit funds as collateral.