What Are Perpetual Contract Rules? Understanding Perpetual Contract Rules in 3 Minutes

The digital currency market is highly volatile, yet investors remain keenly interested. Currently, digital currency trading methods are divided into spot trading and contract trading. Compared to spot trading, digital currency contract trading remains a relatively novel mode, with the most popular types being delivery contracts and perpetual contracts. Today, we’ll focus on perpetual contracts—a critical tool for investors who must first understand their rules before diving in. Below, we break down perpetual contract rules in detail.

What Are Perpetual Contract Rules?

Using Huobi Global as an example, here’s how perpetual contracts work:

1. Trading Hours

• Perpetual trading operates 24/7, settling every 8 hours at 04:00, 12:00, and 20:00 (GMT+8).
• Trading halts during结算 periods, with downtime varying by system processing speed.
• Resumption is asset-specific. For instance, if BTC结算 lags, other assets may resume trading earlier.

2. Order Types

Two primary actions: opening and closing positions, each with two directions:

• Long (Buy): Opening a long position (bullish) increases long holdings. Closing it (selling) reduces exposure.
• Short (Sell): Opening a short position (bearish) increases short holdings. Closing it (buying) offsets the position.

3. Order Execution Methods

Five key委托 types:

1. Limit Order: Specify price/quantity. Options:

   • Post Only (Maker-only).
   • FillOrKill (execute fully or cancel).
   • ImmediateOrCancel (partial fills allowed).
2. Stop-Limit Order: Triggers a limit order when market hits预设条件.
3. Market Order: Matches best对手价 (e.g.,卖1 for buys).
4. Best-N Tiers: Auto-fills within top 5/10/20对手 tiers for speed.
5. Flash Close: Guarantees fills within 30 tiers, converting unfilled portions to limit orders.

4. Position Management

• Merges同一方向 holdings (e.g., 1 BTC long + 2 BTC long = 3 BTC).
• Average Cost Method: Closes are based on持仓均价, not individual entry prices.
  Example: Buying 1 BTC at $5,000 and 2 at $1,500 yields an average cost of ~$1,285.7.

Calculating P&L

1. Unrealized P&L (open positions):

   • Long: (1/entry_price − 1/last_price) × contracts × face_value.
   • Short: (1/last_price − 1/entry_price) × contracts × face_value.
     Example: 100 long BTC contracts ($100面值) at $5,000, now $8,000 = +0.75 BTC.

2. Realized P&L (closed positions):

   • Factors in fees, funding rates, and平仓价差.
     Example: Closing the above at $4,000 = −0.5 BTC.

FAQs

Q1: How often do perpetual contracts settle?
A: Every 8 hours (3x daily), halting trading briefly.

Q2: What’s the difference between long and short positions?
A: Long profits if prices rise; short profits if prices fall.

Q3: Can I hold multiple perpetual contracts?
A: Yes, but positions in the same asset/direction merge.

Q4: What’s the risk of using leverage in perpetual contracts?
A: Leverage放大 gains/losses. Overuse can lead to liquidation.

Q5: How are funding rates applied?
A: Paid between long/short holders during settlements—details vary by exchange.

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Key Takeaways:

• Perpetual contracts mimic spot markets but use杠杆.
• Rules cover trading hours, order types, and P&L calculations.
• Risk management is crucial—leverage wisely!