Dear Users,
To help you understand the features, trading mechanisms, and associated risks of perpetual contracts, we provide the following overview. Please read it carefully before trading and plan your trading activities according to your experience and risk tolerance.
I. What Are Perpetual Contracts?
A perpetual contract is a derivative contract without a fixed expiration date. Users can trade movements in the underlying asset’s price by opening long or short positions without actually holding the underlying asset.
Unlike futures contracts with a fixed expiration date, perpetual contracts do not require scheduled settlement at expiry. Users may continue holding positions as long as margin requirements are met and the contract remains operational, or voluntarily close their positions according to their trading plans.
Having no fixed expiration date does not mean that positions are unrestricted. Insufficient margin, contract delisting, or other circumstances specified in the rules may affect the continuation and handling of positions.
II. Product Features and Advantages
1. Two-Way Trading with Flexible Direction Selection
Users may open long or short positions based on their market assessment. Long positions may generate profits when prices rise, while short positions may generate profits when prices fall. If prices move against the position, losses may occur.
2. No Fixed Expiration Date for Flexible Position Management
Perpetual contracts have no fixed settlement date at expiry. Users can adjust their positions according to market changes and their own strategies without needing to replace contracts due to scheduled expiration.
3. Margin Trading for Greater Capital Efficiency
Perpetual contracts use a margin trading mechanism, allowing users to establish positions by providing a portion of their value as margin. While leverage improves capital efficiency, it also magnifies losses and increases liquidation risk.
III. Trading Mechanisms
1. Margin and Leverage
When opening a position, users must provide margin as required by the relevant contract. While holding the position, the account or position must continue to meet maintenance margin requirements.
For the same position size, higher leverage generally means less initial margin is required, leaving less room to withstand adverse price movements. Please select leverage appropriately and avoid determining position size solely based on the maximum position you can open.
2. Prices and Profit and Loss
Perpetual contract trading may involve different price indicators, including the index price, mark price, and last traded price, each serving a different purpose.
The last traded price reflects recent transaction prices. The index price generally references the underlying asset’s spot market prices. The mark price is generally used to calculate unrealized profit and loss and assess position risk. Specific price calculation methods, profit and loss calculations, and liquidation trigger criteria are subject to the relevant SUNX contract rules.
3. Funding Mechanism
Perpetual contracts generally use a funding mechanism to help keep contract prices close to the underlying asset’s spot prices. Depending on the direction of the funding rate, position holders may pay or receive funding fees.
Funding fees and trading fees are separate types of charges. For the applicable scope, rates,
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