Trading Rules of Futures

Order Types

Limit Order

• Definition: Users specify the price and quantity for buying or selling. The limit order sets the highest acceptable buy price or lowest acceptable sell price.
• Execution Priority: The market prioritizes transactions at prices favorable to the user.
• Use Cases: Opening/closing positions.

• Effective Mechanisms:

  • Post Only: Ensures the order is only posted as a maker order (no taker fees).
  • FOK (Fill Or Kill): Order executes immediately in full or cancels entirely.
  • IOC (Immediate Or Cancel): Partial fills are allowed; unfilled portions cancel automatically.
• Default: "Always valid" if no mechanism is selected.

Trigger Order

• How It Works: Users preset a trigger price, order price, and quantity. When the market hits the trigger price, the system automatically places a limit order.
• Example: Set a trigger to buy BTC at $50,000 if the market reaches $49,500.

BBO (Best Bid Offer) Order

• Process: Users only input quantity—no price. The system auto-matches the current best opposing price (e.g., lowest ask for buys, highest bid for sells).
• Advantage: Instant execution at optimal market rates.

Optimal Top N BBO Price Order

• Functionality: Expedites orders by letting users select from pre-set price tiers (Top 5, 10, or 20 BBO prices).

• Benefits:

  • Faster execution during volatile markets.
  • Eliminates manual price entry delays.
• Compatibility: Works with limit/trigger orders for opening/closing positions.

Flash Close

• Purpose: Rapidly closes positions using the top 30 BBO prices. Unfilled portions convert to limit orders.
• Risk Mitigation: Predictable pricing avoids slippage during extreme volatility.

Leverage

Key Features

• Range: Supports 1x–125x leverage (e.g., BTC Weekly Futures offer 10x leverage).
• Margin Efficiency: 1 BTC margin can control a 10 BTC position, amplifying profits.

Leverage Switching Rules

1. Universal Adjustment: Changing leverage for one expiry (e.g., Weekly) updates all expiries for the same token.
2. Trading Status: Only adjustable for active futures contracts.
3. Order Restrictions: Requires no open limit/trigger orders.
4. Available Options: Users can only switch to supported leverage tiers.

5. Margin Checks: Switching fails if:

   • Available margin turns negative.
   • Margin ratio ≤ 0%.
6. Failure Scenarios: Network issues, insufficient funds, or system errors may block adjustments.

Example: Switching from 10x to 20x fails if the margin ratio drops below 0%.

Position Management

Merging Positions

• Same Contract/Direction: Positions merge (e.g., 1 BTC + 2 BTC long = 3 BTC total).

• Account Limits:

  • Maximum of 8 contract types (Weekly/Bi-weekly/Quarterly/Bi-quarterly, long/short).

Closing Positions

• Cost Calculation: Uses Moving Average method—gains/losses based on the aggregate average cost, not individual entry prices.

Position & Order Limits

Purpose

Prevents market manipulation by capping gross positions and order quantities.

Enforcement Measures

Huobi Futures may:

• Cancel orders.
• Force liquidations.
• Impose position/order ceilings.

Note: Limits adjust dynamically per market conditions without prior notice.

FAQ

1. How does leverage affect my margin?

Higher leverage reduces required margin but increases liquidation risk. For example, 10x leverage means a 10% price drop could wipe out your position.

2. Can I change leverage with open orders?

No. Cancel all pending orders before switching leverage.

3. Why did my Flash Close partially fill?

Flash Close prioritizes speed. Unfilled portions convert to limit orders at the next best available price.

4. What happens if I exceed position limits?

Huobi may forcibly reduce your positions to maintain market stability.

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