Welcome to KuCoin Futures! This article will help the beginners of Futures trading to know about the related introductory knowledge and to start the trading journey smoothly.
What is KuCoin Futures?
KuCoin Futures(KuCoin Mercantile Exchange) is an advanced cryptocurrency Trading Platform which offers various leveraged Futures that are bought and sold in Bitcoin/USDT. Instead of fiat currencies or other cryptocurrencies, KuCoin Futures handles Bitcoin/ETH only, and all the profit and loss are in Bitcoin/USDT.
What do I trade at KuCoin Futures?
All the trading products on KuCoin Futures are Futures of cryptocurrency. Different from the spot market, you trade financial Futures with others at KuCoin Futures instead. A Futures in KuCoin Futures is an agreement to buy or sell a particular crypto asset at a predetermined price and a specified time in the future.
What are the meanings of these commonly used words at KuCoin Futures?
Margin: The margin is used in opening a position or maintaining your current position, which is formed by Initial Margin and Maintenance Margin. Initial Margin is the minimum amount of funds you must deposit to open a position. Maintenance Margin is the minimum amount of funds you must hold to keep a position open.
Mark price: This system sets the Mark Price of the Futures to the Fair Price. It only affects the liquidation price and unrealised PNL. Realised PNL is not affected.
Index price: The weighted price tracked from the spot prices of 6 exchanges. You can click here to know more details about the Index price.
Auto-Deposit Margin：When Auto-Deposit Margin mode is enabled, funds in the Available Balance will be added to the existing position whenever liquidation happens, trying to prevent the position from being liquidated. This mode is useful for users who are hedging existing positions.
PnL (Profits and Loss):
Unrealised PNL: The unrealised PNL is based on the difference between the average entry price and mark price. It is a reference PNL of a position.
Realised PNL: This is based on the difference between the entry price and exit price of a position. Trading Fees and Funding Fees are also included in the realised PNL.
Liquidation: To keep the positions open, traders are required to hold a percentage of the value of their position, i.e., the Maintenance Margin percentage. If a trader fails to fulfill the maintenance requirement, his/her position will be taken over by the liquidation engine and gets liquidated, and the maintenance margin will be lost.
ADL (Auto-Deleveraging): When a position is taken over by the liquidation engine, the insurance fund will be used to cover the extra cost of this liquidation process, i.e., if the position is closed at a worse price than the bankruptcy price. However, if the insurance fund is not enough, the ADL system will automatically start and deleverage the counterparty positions of the liquidated position at the bankruptcy price of that position, by profit and leverage level priority.
The ADL mechanism has protected users from losing extra margins in their account if their position is being liquidated and also avoided the inflexibility over the settlement in the Socialised Loss mechanism.
How to trade Futures at KuCoin Futures?
In simple terms, KuCoin Futures trading is a process of opening a position - getting profit/loss from the position - closing a position. Only after the position is closed will the position's profit/loss be settled and reflected in the balance. You can follow the steps in the guidance article below to start your Futures trading: