Perpetual Contracts are leverage trading products; While amplifying returns, it also magnifies potential losses. KKcoin has put in place several measures to control risks which can help minimize trading losses in an unfavorable market.
Position Limit mechanism
KKcoin’s Perpetual Contract enforces a position limit of ≦50%. Once the position limit exceeds 50%, no new position can be initiated. This mechanism does not require traders to actively manage their accounts, particularly in an adverse market where capability to withstand risk is extremely low resulting in massive losses and/or forced liquidation.
Position Limit = (Used Margin + Locked Margin) / Account Equity*100%
Take Profit and Stop Loss
Take Profit and Stop Loss refers to a certain pre-set price whereby an open position is automatically closed when it reaches that level, locking in profits (Take Profit) or limiting losses (Stop Loss) on that position without the need for constant surveillance.
Given that Perpetual Contracts are based on peer-to-peer transactions, the system will automatically place respective orders at Take Profit/Stop Loss prices but may not necessarily be filled. KKcoin will use email and/or account notifications to inform traders of Take Profit/Stop Loss order status and may require manual intervention to close positions in the event that there is no matching orders from the other side.
Warnings based on Account risk rating
KKcoin’s perpetual contracts use Account risk ratings to measure an account’s ability to withstand risk. Under the cross-margin mechanism, total Account Equity and margin is used when calculating the risk rating, instead of profit/loss of individual positions.
Under the cross-margin mechanism, if the account has two open positions where position A is profitable and B is loss-making, yet account risk rating has fallen below 50% triggering forced liquidation, both positions will be liquidated.
Account risk rating = Account Equity / Used Margin*100%
Warning triggers when Account risk rating ≦ 100%. At this point, investors are advised to add Equity to their Perpetual Contracts account or reduce position until their risk rating increases to >100%. (Note: KKcoin will send reminders via email/account notification at risk rating levels ≦100% and ≦70%. Investors should be aware of the risks and take appropriate actions at all times. These notices are non-obligatory and will be sent on a best effort basis only).
Forced liquidation of all positions will occur when Account risk rating ≦ 50%, avoiding massive losses.
Price limit mechanism
In order to protect our customers from massive volatility and market manipulation, KKcoin adopts a price limit mechanism as a risk control measure to ensure a fair and open trading environment.
KKcoin will dynamically calculate Price limit rules by integrating dozens of parameters such as trading volume, position, and percentage deviation from index price. For long positions, when order price is higher than Spot Index price*1+5% (the highest price beyond the price limit), order will be invalid; For short positions, when order price in lower than Spot Index price*1-5% (the lowest price beyond the price limit), order will be invalid.
If you have any questions regarding KKcoin Perpetual Contracts, including any operational questions or trading rules, please contact us immediately. We are servicing your requests on a 24hr basis to provide you optimal service!