A Perpetual Swap Contract is a derivative product that is similar to a traditional futures contract. There is no expiry or settlement and there is no time limit for position holding. Meanwhile, in order to track underlying index price, the perpetual contract uses funding cost mechanism to ensure that the price follows closely to underlying price.
When trading perpetual contracts, a trader needs to be aware of several mechanics of the market. The key components a trader needs to be aware of are:
1.Position Marking: Perpetual Contracts adopts the fair price marking. The fair price determines unrealized PnL and liquidation prices.
2.Initial and maintenance margin: These key margin levels determine how much leverage one can trade with and at what point liquidation occurs.
3.Funding: Periodic payments exchanged between the buyer and seller every 8 hours. If the rate is positive, then longs will pay and shorts will receive the rate, and vice versa if the rate is negative. Note: You will only pay or receive funding if you hold a position at the Funding Timestamp.
4.Timestamps: 04:00, 12:00 and 20:00 (Singapore Time, GMT+8).
Traders can observe the current funding rate for a contract on the Trade tab under ABIT Contract Trading Fee Rate.