Perpetual Futures are a special type of contract that, unlike traditional futures contracts, have no expiration date and allow traders to open and close positions at any time. In Perpetual Futures, Quantity Unit, Cost Value, and Nominal Value are three key concepts that relate to the size of the position, the cost to the trader, and the value of the position, respectively. Bitunix offers Nominal Value, Cost Value, and Quantity Unit as the units for placing orders, and the following are detailed explanations of these concepts:
Nominal Value
Definition: Nominal Value is the contract size or value of a perpetual contract, expressed in USDT, which represents the market value of your position.
Purpose: Nominal Value is used to calculate the value of your position and your profit and loss(PnL). It represents the value of the you are holding, but there is no leverage or margin involved.
Example: Suppose you place an order for 1000 USDT in a BTCUSDT perpetual contract with a nominal value, a leverage of 10X, and a price of 10000 USDT. In the case of not considering the commission fee, your cost will be the nominal value / leverage = 1000 / 10 = 100 USDT. And the quantity of orders you place will be the nominal value / price = 1000 / 10000 = 0.1.
Cost Value
Definition: Cost Value is the amount of cost you put into a perpetual contract when you open a position, including initial margin and transaction fees. It represents the actual cost you have paid in the transaction.
Purpose: Cost value is used to assess the actual risk and cost you incur in a trade. It helps you determine your trading costs and margin requirements.
Example: Suppose you place an order for 1000USDT in a BTCUSDT perpetual contract with cost value, a leverage of 10X, and a price of 10000USDT. In the case of not considering the commission fee, the quantity of orders you place will be Cost Value * Leverage / Price = 1000 * 10 / 10000 = 1.
Quantity Unit
Definition: Quantity Unit is the quantity of the underlying asset that you place an order to buy or sell in a perpetual contract, and is the base unit in the trading system.
Purpose: The quantity unit determines the size of each order you place, as well as the amount of margin required for the transaction. It helps you manage risk by controlling the size of your position.
Example: Suppose you place an order in the BTCUSDT perpetual contract, but use the quantity unit and a leverage of 10X, with the price of 10,000 USDT. And the quantity is 1. In the case of not considering the commission fee, your cost, that is, the quantity * price / leverage = 1 * 10,000 / 10 = 1,000 USDT; your nominal value that is, the quantity * price = 1 * 10,000 = 10,000 USDT.
Note
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The nominal value is the size of the contract, the cost value is the actual cost you have paid, and the unit of quantity is the amount of the underlying asset you place each time you place an order.
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The cost value usually includes the initial margin and transaction fees for opening a position.
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The use of leverage can increase the size of your position, but it also increases the cost value and the potential risk of profit and loss.
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Before trading in Perpetual Futures, it is important to understand the trading rules and fees of the exchange in order to effectively manage risk and cost and make informed trading decisions.
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Finally, please note that trading in Perpetual Futures is high risk and may result in loss. It is recommended that you are well informed, have a risk management strategy in place, and trade with caution before engaging in this type of trading.