UEEx is about to launch USDT-Margined Bi-Directional Perpetual Contracts to replace the traditional USDT-Margined Uni-Directional Perpetual Contracts, while still retaining support for both Cross and Isolated margin modes. Compared to the traditional Uni-Directional Perpetual Contracts, the newly introduced Bi-Directional Perpetual Contracts offer more flexibility and versatility in position and risk management, catering to various user needs.
Traditional Uni-Directional Perpetual Contracts
In the Uni-Directional Perpetual Contracts mode, a trading pair can only hold positions in one direction, either long or short, and cannot simultaneously hold positions in both directions.
· Feature 1: Single Direction
If you already hold a long position in a trading pair and then open a short position in the same trading pair, your long position will be directly reduced, rather than adding a new short position.
· Feature 2: Straightforward
Suitable for simple trading strategies that only require focusing on one direction of positions.
· Feature 3: Easy Management
Because you do not hold long and short positions simultaneously, position management and risk control are relatively straightforward.
New Bi-Directional Perpetual Contracts
In the Bi-Directional Perpetual Contracts mode, users can hold long and short positions in both directions under the same contract, enabling better management of contract positions and execution of trading strategies in different market conditions to achieve higher returns.
· Feature 1: Dual Positions
Users can simultaneously hold long and short positions, managing these two directions of positions separately.
· Feature 2: Hedge Strategies
Suitable for hedge strategies, users can reduce risk by holding long and short positions simultaneously when the market is highly volatile.
· Feature 3: Complex Management
Requires simultaneous management of long and short positions, making strategy and position management more complex.
Illustrative Example
Suppose you are trading a BTC/USDT contract and already hold a long position of 10 BTC:
· Uni-Directional Perpetual Contracts Mode
If you place a sell order for 5 BTC, your long position will decrease to 5 BTC without adding a new short position.
· Bi-Directional Perpetual Contracts Mode
If you place a sell order for 5 BTC, you will simultaneously hold a long position of 10 BTC and a short position of 5 BTC, with these two positions being independent.
USDT-Margined Bi-Directional Perpetual Contract Rules
Advantages of USDT-Margined Bi-Directional Perpetual Contracts
- High Flexibility: Allows holding both long and short positions simultaneously, facilitating trading in different market conditions and providing more trading opportunities and strategies.
- Risk Hedging: Enables users to hedge against market volatility by holding both long and short positions, reducing potential losses from single-direction positions.
- Multiple Strategy Application: Suitable for advanced traders to implement complex trading strategies such as cross-market arbitrage and hedging. Traders can exploit price differences between markets to generate profits.
- Coping with Volatility: In times of significant market volatility, bi-directional positions can reduce risk. For example, holding a long spot position while opening a short futures position can hedge against losses when the market declines.
- Dynamic Adjustment: Allows dynamic adjustment of long and short position ratios based on market changes, providing flexible response to market trends and enabling more refined risk management.
- Reduced Liquidation Risk: When long and short positions hedge each other, the risk of forced liquidation due to significant single-direction market swings is effectively reduced.
- Risk Diversification: By holding positions in different directions, investment risks are effectively diversified, avoiding the need to bet all funds on one direction.
Bi-directional positions offer higher flexibility and enhanced risk management capabilities, making them suitable for experienced traders navigating complex market environments.
The above information is solely a product introduction to USDT-Margined Bi-Directional Perpetual Contracts and does not constitute any investment advice.
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