What are the terms for trading on exchange contracts?

Ouyi Trading Platform Margin and Risk Management Guide

This article explains the margin trading mechanism of Ouyi’s unified account in detail, covering margin rate calculation, closing income, position reduction and forced closing, automatic position reduction, risk reserve, position holding model and common term explanations.

1. Margin rate

The margin rate is a key indicator for measuring the risk of trading positions. The higher the value, the safer the position. Ouyi provides a variety of margin modes, and the calculation method is as follows:

• 1. Spot and contract full position trading:

Margin rate = (Available balance of all positions Full position income - Number of pending orders sold - Number of options to buy orders - Number of opening positions by position - All order fees) / (Maintenance margin, liquidation fees)

Among them, the maintenance margin includes leveraged borrowing coins, delivery, perpetual and option maintenance margin; the liquidation fee includes the corresponding leveraged borrowing coins, delivery, perpetual and option handling fees. This design is designed to avoid sudden changes in risk after order transactions, resulting in a breach of position.

Filing liquidation fee = Leverage borrowing fee Delivery perpetual handling fee Options fee

Leveraged coin borrowing fee = Borrowing coin position value × User taker rate; Delivery perpetual fee = Delivery perpetual position value × User taker rate; Options fee = Option position value × User taker rate.

• 2. Cross-currency margin trading:

Margin rate = Valid margin / (Maintenance margin, position reduction fee)

The maintenance margin and position reduction fees are calculated based on (number of positions, number of positions, number of orders opened and placed).

• 3. Single/cross-currency margin trading position by position:

Long positions: margin rate = [Position assets - (Liability Interest) / Mark price] / (Maintenance margin handling fee)

Short position: margin rate = [Position assets - |Liabilities Interest | × Mark price]/ (Maintenance margin handling fee)

2. Closed income

Return on closing of long positions = (Part value × Contract multiplier × Number of numbers) / Average opening price - (Part value × Contract multiplier × Number of numbers) / Average closing price

Earning income of short positions = (Part value × Contract multiplier × Number of numbers) / Average closing price - (Part value × Contract multiplier × Number of numbers) / Average opening price

3. Reduce positions and force closing positions

In the full position/place-by-position mode, when the margin rate ≤ maintain margin rate and closing handling fee rate, the position reduction or liquidation will be triggered.

For users with position level ≥ 3, if the margin ratio is lower than the current gear requirement but higher than the lowest gear requirement, the system will partially reduce the position until the new gear requirement is met or forced closing is triggered.

Position level ≤ 2 or When the margin ratio is below the minimum level requirement, the system will force closing all positions at the bankruptcy price (the price with a margin ratio of zero). This mechanism is designed to avoid severe fluctuations that lead to serial liquidation.

After forced liquidation, the maximum loss shall not exceed the total margin of the liquidated position.

IV. Automatic position reduction (ADL)

Automatic position reduction mechanism (ADL) is used to control the overall risk of the platform in extreme market conditions. When the risk reserve drops by 30% within 8 hours (the specific proportion may be adjusted according to market conditions), the platform will directly trade with the counterparty account at a marked price and forcefully reduce positions. Users will receive notifications and can view relevant bills in the Order Center.

5. Risk reserve

Risk reserves are used to resist the risk of crossing positions, and the main sources include reserves provided by the platform and strong surplus. The risk reserves for different business lines and subject contracts are independent of each other. Adjustments are made every day at 16:00:00 (HKT).

VI. Two-way positions and one-way positions

Both-way positions allow long and short positions to be held simultaneously, while one-way positions only allow unilateral positions. The order mode is effective for delivery/perpetual contracts, and the mode cannot be adjusted when holding positions or pending orders exist.

7. Other common terms

• Coin standard contract: The denomination unit is USD, and the guaranteed assets and profit and loss settlement currency are the subject currency (such as BTC).
• U standard contract: The denomination unit is U (USDT, USDC, etc.), and the guaranteed assets and profit and loss settlement currency are U.
• Full Position: Use all available balances as margin.
• Port by position: The initial order margin is the maximum loss.
• Leverage multiple: Multiple of amplification of returns and risks.
• Average opening price: Average opening price.
• Tag price: The latest price used to calculate profit and loss and margin.
• First Fixed Price and Margin Rate: Margin Rate ≤ 100% triggers a reduction or a liquidation.

Disclaimer: This article is for reference only and does not constitute any investment advice. There are high risks in digital asset trading, please operate with caution.

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