Bithumb perpetual contract trading rules

To ensure fair trading, Bithumb has implemented rules including order types, leverage adjustments, margin calls, funding rates, position limits, and risk management measures for its perpetual contract market.

Nov 10, 2024 at 06:26 pm

Bithumb Perpetual Contract Trading Rules

Perpetual contracts, also known as perpetual futures or inverse swaps, are financial instruments that simulate the returns of an underlying asset without an expiration date. They offer traders the opportunity to speculate on price movements, leverage their positions, and hedge against risk.

Bithumb, one of the leading cryptocurrency exchanges in South Korea, offers perpetual contract trading on a wide range of cryptocurrencies. To ensure fair and transparent trading, Bithumb has established a comprehensive set of rules that govern this market.

Trading Mechanism

• Order Types: Bithumb supports various order types, including limit orders, market orders, stop orders, and trailing stop orders.
• Leverage Ratio: Traders can adjust their leverage ratio, which determines the amount of capital they can borrow to increase their trading potential.
• Margin Call: If a trader's position value falls below a certain threshold, Bithumb will issue a margin call, requiring the trader to deposit additional funds or close their position.
• Auto-Deleveraging: If a trader fails to meet a margin call, Bithumb may automatically deleverage their position by forcefully closing some or all of their trades.

Market Structure

• Funding Rate: A daily adjustment applied to perpetual contracts to maintain their price alignment with the underlying spot market.
• Mark Price: An index price used to calculate the funding rate and prevent market manipulation.
• Insurance Fund: A reserve that covers potential losses incurred by traders in case of extreme price movements or system disruptions.

Trading Restrictions

• Minimum Trade Size: There are minimum trade size requirements for each perpetual contract to ensure market liquidity.
• Trading Hours: Trading is open 24/7, except during maintenance periods.
• Position Limits: Bithumb imposes limits on the maximum number of contracts that a trader can hold in a single position to prevent market manipulation.
• Restricted Countries: Certain countries are restricted from trading perpetual contracts on Bithumb due to regulatory constraints.

Risk Management

• Risk Disclosure: Bithumb clearly outlines the risks associated with perpetual contract trading and advises traders to carefully assess their suitability before participating in this market.
• Stop-Loss and Take-Profit Orders: Traders can set stop-loss orders to limit potential losses and take-profit orders to secure realized profits.
• Emotional Control: Bithumb emphasizes the importance of maintaining emotional control and following a sound trading strategy to minimize irrational decision-making.

Other Regulations

• Anti-Money Laundering (AML): Bithumb adheres to AML regulations to prevent illicit activities from occurring on its platform.
• Know Your Customer (KYC): Bithumb requires users to complete KYC procedures to verify their identity and prevent fraud.
• Privacy Policy: Bithumb has a comprehensive privacy policy to safeguard users' personal information.
• Dispute Resolution: Bithumb provides channels for traders to resolve disputes or seek assistance in case of any trading issues.

By understanding and complying with these trading rules, traders can participate in Bithumb's perpetual contract market with greater confidence and minimize potential risks. It is important to note that these rules may be subject to change at any time, and traders should refer to Bithumb's official documentation for the most up-to-date information.