Explanation of Terminology on the Futures Trading Page
#Basic
#Futures
#Beginners
#Basic Concepts
For beginners, futures trading can be more complex than spot trading, as it involves a greater number of professional terms. To help new users understand and master futures trading effectively, this article aims to explain the meanings of these terms as they appear on the MEXC futures trading page.
We will introduce these terms in order of appearance, starting from left to right.
1. Terms above the K-line chart
Perpetual: "Perpetual" denotes continuity. The commonly seen "perpetual futures" (also known as perpetual futures contracts) evolved from traditional financial futures contracts, with the key difference being that perpetual futures have no settlement date. This means that as long as the position is not closed due to forced liquidation, it will remain open indefinitely.
Index Price: The comprehensive price index obtained by referencing the prices of major mainstream exchanges and calculating the weighted average of their prices. The index price displayed on the current page is the MX index price.
Fair Price: The real-time fair price of the futures, calculated based on the index price and market price. It is used to calculate the floating PNL of positions and determine position liquidation. It may deviate from the last price of the futures to avoid price manipulation.
Funding Rate / Countdown: The funding rate in the current stage. If the rate is positive, long position holders pay the funding fee to short position holders. If the rate is negative, short position holders pay the funding fee to long position holders.
2. Terms in the order book area
Order Book: A window to observe market trends during the trading process. In the order book area, you can observe each trade, the proportion of buyers and sellers, and more.
3. Terms in the trading area
Open and Close: After entering the price and quantity based on your judgment of the market direction, you can choose to open a long or short position. If you predict an increase in price, you open a long position; if you predict a decrease, you open a short position. When you sell the contract you bought, you close the position. When you open a position by purchasing a contract and hold it without settling, it is called a holding position. You can view your holding positions by clicking on [Open Position] at the bottom of the page.
Open Long: When you predict that the token price will rise in the future and open a position based on this trend, it is known as opening a long position.
Open Short: When you predict that the token price will fall in the future and open a position based on this trend, it is known as opening a short position.
Margin and Margin Mode: Users can engage in futures trading after depositing a certain percentage of funds as financial collateral. This fund is known as margin. The margin mode is divided into isolated margin or cross margin.
Isolated: In isolated margin mode, a certain amount of margin is allocated to a position. If the margin for a position decreases to a level below the maintenance margin, the position will be liquidated. You can also choose to add or reduce margin to this position.
Cross: In cross margin mode, all positions share the cross margin of the asset. In the event of liquidation, the trader may lose all the margin and all positions under the cross margin of that asset.
Order Types: The order types are divided into limit order, market order, trigger order, trailing stop order, and post-only order.
Limit: A limit order is an order placed to buy or sell at a specific price or better. However, a limit order's execution isn't guaranteed.
Market: A market order is an order placed to buy or sell quickly at the best available price in the market.
Trigger: For trigger orders, users can set a trigger price, order price, and quantity in advance. When the market price reaches the trigger price, the system will automatically place an order at the order price. Before the trigger order is triggered successfully, the position or margin will not be frozen.
Trailing Stop: A trailing stop order is submitted to the market based on the user's settings as a strategic order when the market is in a retracement. Actual Trigger Price = Market's Highest (Lowest) Price ± Trail Variance (Price Distance), or Market's Highest (Lowest) Price * (1 ± Trail Variance). At the same time, users can set the price at which the order is activated before the trigger price is calculated.
Post Only: A post-only order will not be immediately executed in the market, ensuring that the user will always be the maker. If the order were to be matched with an existing order immediately, it would be canceled.
TP/SL: A TP/SL order is an order with preset trigger conditions (take profit price or stop-loss price). When the last price / fair price / index price reaches the preset trigger price, the system will close the position at the best market price, based on the preset trigger price and quantity. This is done to achieve the goal of taking profit or stopping losses, allowing users to automatically settle the desired profit or avoid unnecessary losses.
Stop Limit Order: A stop limit order is a preset order where users can set the stop-loss price, limit price, and buy/sell amount in advance. When the last price reaches the stop-loss price, the system will automatically place an order at the limit price.
COIN-M: Coin-margined futures provided by MEXC are a reverse contract that uses cryptocurrency as collateral, meaning that cryptocurrency serves as the base currency. For example, in the case of BTC coin-margined futures, Bitcoin is used as the initial margin and for PNL calculations.
USDT-M: USDT-margined futures provided by MEXC is a linear contract, which is a linear derivative product quoted and settled in USDT, a stablecoin pegged to the value of the US dollar.
4. Terms in the Futures Calculator Area
PNL: Enter your entry price, the quantity of futures you hold, and the leverage multiplier. Then, set your expected close price to calculate the final earnings and yield.
Target Price: Enter your entry price, the quantity of futures you hold, and the leverage multiplier. Then, set your desired yield to calculate the final earnings and yield.
Liquidation Price: Enter your entry price, the quantity of futures you hold, and the leverage multiplier. Then, select the margin mode (cross or isolated) to calculate your liquidation price.
Max Open: Enter your entry price, leverage multiplier, and your available margin amount to calculate the maximum number of contracts you can open for a long/short position.
Entry Price: When you have multiple futures positions for the same trading pair, enter the respective entry prices and the corresponding futures quantities. You can calculate the average entry price for contracts of the same trading pair.
Funding Fee: Enter the fair price, position quantity, and the funding rate (0.01%) to calculate the amount of funding fee you need to pay or receive.
Note: The results calculated using the futures calculator are for reference purposes only, and the actual results in live trading will prevail.
For beginners, before engaging in futures trading for the first time, you can practice on the MEXC Futures Demo Trading interface to familiarize yourself with various features before entering the live trading platform for trading.
5. Terms in the order area below the K-line chart
5.1 Open Position
Position: Number of contracts in positions that have not yet been closed.
Avg Entry Price: The average cost price when a user opens a position. For instance, if a user opens a long position of 100 cont in MX/USDT perpetual futures at 2 USDT and later opens another position of 100 contracts in the same direction at 2.1 USDT, the user's average entry price would be calculated as follows: (2 * 100 + 2.1 * 100) / (100 + 100) = 2.05 USDT.
Fair Price: This mechanism was introduced to protect users from losses due to abnormal market fluctuations on a single platform. It is calculated by weighting price data from mainstream exchanges, providing a fair reflection of the real market price. For more information about the fair price, you can refer to the article "Index Price, Fair Price and Last Price."
Est. Liq Price: When the fair price reaches the estimated liquidation price, your position will undergo forced liquidation. For more details on forced liquidation, you can refer to the article "Forced Liquidation."
5.2 Open Order
Amount and Filled Amount: "Amount" refers to the desired trading volume set by the user before placing an order. When users place large orders, the order is usually split into multiple smaller orders, which are filled sequentially. "Filled Amount" refers to the actual quantity that has been traded. When the order amount equals the filled amount, it means the order has been completely filled.
Order Price and Filled Price: "Order Price" refers to the desired trading price entered by the user when placing an order. If a user chooses a limit order, the order price is the price entered by the user. If the user selects a market order, the order price depends on the actual trading results. When users place large orders, the order is usually split into multiple smaller orders, which are filled sequentially. Due to market fluctuations, the actual filled price of each order may vary. "Filled Price" refers to the average of these actual filled prices.
5.3 Position History
Avg Entry Price: The average cost to open a position.
Avg Close Price: The average price of all closed positions.
Realized PNL: All realized profits and losses generated by the position, including trading fees, funding costs, and closing PNL. (Excluding portions of trading fees offset using coupons and MX.)
5.4 Wallet
Total Equity: Wallet Balance + Unrealized PNL.
Wallet Balance: Total Inbound Transfers – Total Outbound Transfers + Realized PNL.
Understanding the terms related to futures trading is just the first step in learning how to use futures tools. Next, you need to gain practical experience through trading. Before trading futures, you can practice using the futures Demo Trading platform provided by MEXC. Once you are proficient, you can move on to live futures trading.
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.