Futures Trading FAQ
#Basic
#Futures
#Beginners
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1. What are Perpetual Futures?
Perpetual futures are a type of derivative contract that differs from traditional futures or options contracts in that it does not have a fixed expiration date. This allows traders to hold positions indefinitely until they manually close them or are forcibly liquidated. Perpetual futures enable traders to enter or exit the market at any time. In cryptocurrency trading, perpetual futures are a popular trading method.
Perpetual futures offer greater flexibility, allowing traders to engage in leveraged trading and enter or exit the market at any time. You can read "What is Futures Trading" if you want to learn more about the basics of futures trading.
2. What Is the Difference Between Futures and Spot Trading?
Spot traders own the underlying asset, whereas futures traders trade contracts that represent the value of a specific cryptocurrency. This is the most fundamental difference between the two. If you want to learn more about the differences between them, feel free to read "Spot Trading vs Futures Trading" for further understanding.
3. What Are the Trading Fees for MEXC Futures?
On the MEXC platform, the futures trading fee rate for Maker is 0%, and the fee rate for Taker is 0.02%. For the latest fee rates on the MEXC platform, you can also check the fee rate page on the MEXC official website.
4. How Much Leverage Does MEXC Perpetual Futures Offer?
MEXC perpetual futures offer adjustable leverage from 1x to 400x, with the leverage multiplier varying by futures.
5. How To Open Long / Short?
Taking the web version as an example, on the MEXC futures trading page, you can adjust the margin mode (isolated or cross) and leverage multiplier. Choose the order type, such as market, enter the quantity, and then click [Open Long] or [Open Short]. If the user accurately predicts the price movement, they will make a profit; otherwise, they will incur a loss.
In the same futures market, if you are using the hedge mode, you can hold both long and short positions simultaneously. However, in the one-way mode, you cannot hold both long and short positions at the same time. For detailed information on one-way and hedge modes, you can read "The Difference Between One-Way Mode and Hedge Mode".
6. What Order Types Does MEXC Futures Trading Support?
MEXC futures trading currently supports five order types: limit, market, trigger, trailing stop, and post-only. You can read "Placing Different Types of Futures Orders" for detailed information on these order types.
7. Why Is There a Difference Between the Realized PNL After Closing a Position and the Unrealized PNL Before Closing the Position?
Unrealized PNL is calculated based on fair prices and does not include fees, funding rates, etc.; they are for reference only. Realized PNL, on the other hand, is calculated based on the actual filled price, deducting fees, funding rates, and other costs. Therefore, there is a difference between unrealized and realized PNL.
8. Why Are Funding Fees Charged?
The difference between perpetual futures and traditional futures is that perpetual futures have no expiration date. Therefore, traders can hold positions indefinitely, unless they are liquidated. To ensure that the market price of perpetual futures does not deviate from the spot price, a mechanism is needed to anchor the price of perpetual futures to the spot price. This is where the funding rate mechanism comes into play.
The primary purpose of the funding rate is to allow the market to self-regulate by periodically exchanging funding costs between long and short positions, thereby anchoring the perpetual futures market price to the spot price. MEXC does not charge any funding fees to users; instead, funding fees are collected between users holding positions.
Typically, MEXC perpetual futures settle funding fees every 8 hours, at 00:00 UTC, 08:00 UTC, and 16:00 UTC. For more information on adjustments to the funding rate settlement frequency, you can check the [Futures Announcements] section in the [Help Center].
If you want to learn more about funding rates, you can read "Funding Rate Explained".
9. How To Calculate Futures PNL
9.1 Closing PNL:
Forward Contract (USDT-M Futures)
Long position = (Closing price - Avg. entry price) * Number of holding positions * Futures size
Short position = (Avg. entry price - Closing price) * Number of holding positions * Futures size
Inverse Contract (Coin-M Futures)
Long position = (1/avg. entry price - 1/avg. Closing price) * Number of holding positions * Futures size
Short position = (1/avg. exit price - 1/avg. entry price) * Number of holding positions * Futures size
9.2 Floating PNL:
Forward Contract (USDT-M Futures)
Long position = (Fair price - Avg. entry price) * Number of holding positions * Futures size
Short position = (Avg. entry price - Fair price) * Number of holding positions * Futures size
Inverse Contract (Coin-M Futures)
Long position = (1/avg. entry price - 1/fair price) * Number of holding positions * Futures size
Short position = (1/fair price - 1/avg. entry price) * Number of holding positions * Futures size
10. How To Calculate Liquidation Price
Liquidation Condition: Position Margin + Unrealized PNL ≤ Maintenance Margin, liquidation will happen.
Long Position: Liquidation Price = (Maintenance margin - Position margin + Average entry price * Quantity *Futures size) / (Quantity * Futures size)
Short Position:Liquidation Price = (Average entry price * Quantity * Futures size - Maintenance margin + Position margin) / (Quantity x Futures size)
If you want to learn more about forced liquidation, you can read "What is Forced Liquidation?" and "MEXC Futures Forced Liquidation FAQ".
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, consultation, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.