1. What is a CFD?
Contracts For Difference (CFD) can reflect the price change of the asset and enabling profit or loss of the contract based on the price change without actually owning the asset. CFDs are traded on margin. Profit or loss is determined by the buying and selling prices. CFDs have many advantages over traditional physical stock trading.
2. The basic logic of CFD
CFD follows are long/short strategic that primarily cater to users who prefer making prediction if the cryptocurrency price would increase or decrease in value.
Profit gain in the event of the asset increase in value.
Profit gain in the event of asset decrease in value.
Generally, in a long position, the contract would make profit if the asset’s value increases after the position have been opened, but in the event of the asset’s value decrease the contract will suffer a loss.
Similarly, in a short position, the contract would make a profit if the asset’s value decreases after the position have been open, but in the event of the asset’s value increases the contract will suffer a loss.
So long as the contract is kept open, any profit or loss is maintain as unrealise until the contract closes, the profit or loss will then be realise upon contract close.
Unrealised PNL Calculation Formula:
Long: (Closed Price/Opened Price -1) x Leverage X Capital
Short: (1- Closed Price/Opened Price) x Leverage x Capital
3. Platform Fees Details
Transaction fees: For each transaction a 0.075% of the transaction amount is charged as the transaction fees when the position is closed
Overnight interest: Each open individual contracts are subject to an overnight charge of 0.035% on a daily basis, if the contract is kept open after 23:59 (GMT+8). If a contract position is opened and closed before 23:59 (GMT+8) on the same day, the contract will not be subjected to an overnight charge.
Liquidation mechanics: In the event that the user’s position loses 90%, the Liquidation mechanics will take over the position and force a margin call.
Margin call: When a margin call position is traded below the bankruptcy price (principal loss of 0), a margin call surplus will be generated, and this part of the surplus will be injected in to the risk reserve, which will be used to offset the position loss.
Risk Reserve: The risk reserve is established by the platform to provide financial guarantees to maintain the normal operation of contract transactions and to make up for losses caused by the unforeseen risks of the platform.
Leverage: If you have 100USDT, 50 times leverage means the exchange lends you 4900USDT, and you use this 5000USDT for trading to get 50 times of the original profit.
Open position limit protection: The platform will calculate a reasonable opening price relative to the current price according to market conditions, risk reserve conditions, market depth, etc. billing.
5. Prohibited matters
Ultra-short-term trading is an unacceptable practice and an abuse of the market. By opening and closing the transactions very immediately, users can take advantage of the internet’s time lag, delayed prices and potentially gain profits illegally. The platform reserves the right to exercise the following measures for users detected by the system to use ultra-short-term transactions:
- Terminate your account and access to our servers immediately;
- Exclude all transactions that constitute ultra-short term trading activities;
- Close all transactions that constitute ultra-short-term trading activities based on our current market prices;
- Increase your holding time (that is, a position can be closed for a period of time).