Introduction to OKEx’s Contract Trading System
OKEx stands as one of the most popular blockchain asset trading platforms globally, particularly known for its robust contract trading features. A critical aspect of OKEx’s weekly operations is the contract settlement process, which occurs every Friday at 4:00 PM Beijing Time. During this process, a unique mechanism called “Liquidation Loss Sharing” is triggered—a system every trader must understand to avoid unintended losses.
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1. Contract Settlement Explained
How OKEx’s Weekly Settlement Works
- Unrealized Profits: Gains from open positions appear as “floating profits” until liquidation.
- Realized Profits: After closing a position, profits move to “realized profits.”
- Withdrawable Funds: Only post-settlement funds become part of your account equity and can be withdrawn.
Why does OKEx hold funds until settlement?
This reserve acts as a buffer against potential liquidation losses, ensuring platform stability.
2. Liquidation Mechanics (Official Definition)
From OKEx’s documentation:
“Liquidation loss sharing aggregates losses from force-closed positions across all contracts. These losses are proportionally distributed among profitable traders based on their earnings, ensuring accurate profit calculation and preventing loss-bearing users from分摊.”
Simplified Explanation:
When market volatility triggers forced liquidation:
1. Force-Liquidation: If your 10x leveraged EOS long position hits the liquidation price (e.g., $4.588 from a $5 entry), OKEx auto-sells it via market orders.
2. Two Potential Outcomes:
– Best-Case: Orders fill at/near liquidation price → Remaining margin goes to OKEx’s Risk Reserve Pool.
– Worst-Case: Orders fill below liquidation price (e.g., $4) → You incur a “negative balance” (liquidation loss).
3. Liquidation Loss Sharing in Practice
Every Friday, OKEx calculates:
Total Liquidation Losses - Risk Reserve = Uncovered Losses
If uncovered losses exist, profitable traders share the burden proportionally:
– BTC profits cover BTC losses.
– EOS profits cover EOS losses.
– Example: During extreme volatility,分摊 rates can reach 17.68% (historically).
Why is this fair?
1. No superior alternatives exist in decentralized markets.
2. Transparency in rules allows informed trading decisions.
4. Comparing Traditional vs. Crypto Futures Markets
| Aspect | Traditional Futures | OKEx Crypto Futures |
|---|---|---|
| Risk Bearer | Brokerages (may pursue debts) | Profitable traders |
| Leverage Regulation | Varies by brokerage risk appetite | Platform-defined (10x–20x) |
| Liquidation Process | Similar force-close mechanisms | Identical,但with分摊 |
Key Insight: Crypto exchanges act as pseudo-brokers but mitigate systemic risk through shared liability.
5. Step-by-Step OKEx Contract Trading
- Account Setup:
- Complete KYC (all tiers recommended).
- Purchase USDT via fiat (bank transfers preferred over ATM/支付宝).
- Fund Allocation:
- Transfer USDT from “Peer-to-Peer” to “Spot Account”.
- Buy contract-supported coins (BTC, ETH, EOS, etc.).
- Contract Trading:
- Select coin + contract type (Weekly/Quarterly).
- Use limit orders for precision; auto-margin to prevent liquidation.
- Post-Trade:
- Monitor weekly settlements.
- Adjust positions before Friday 4:00 PM volatility.
Pro Tip: OKEx’s 20x leverage ≠ higher profits per trade—it allows larger positions with the same capital.
6. Risk Management Essentials
- Never over-leverage: 10x is safer for beginners.
- Diversify: Avoid concentrating in one coin.
- Watch交割日: Price “spikes” often occur pre-settlement.
“Futures trading asks not ‘to profit?’ but ‘to survive?’—always prioritize risk control.” — Crypto Community Proverb
7. Token-to-Token Trading Basics
OKEx’s 币币 (Token-to-Token) Trading enables direct crypto swaps (e.g., BTC→ETH), offering:
– Lower fees vs. fiat conversions.
– Three trading zones: USDT, USDⓈ, CRYPTO.
– Price dynamics driven by supply/demand.
Example:
If LTC/BTC = 0.0099, selling 1 LTC yields 0.0099 BTC.
8. Advanced OKEx Features
- Eight Order Types: Iceberg, TWAP, etc.
- Real-Time Depth Charts: Analyze buy/sell walls.
- OKB Utility: Reduce fees with OKEx’s native token.
FAQs
Q1: How to minimize liquidation risks?
A1: Use ≤10x leverage, enable auto-margin, and monitor positions hourly during high volatility.
Q2: Why are my Friday profits lower than expected?
A2: Likely due to liquidation loss分摊—check OKEx’s settlement report.
Q3: Is OKEx safer than BitMEX?
A3: OKEx offers app accessibility and分摊; BitMEX requires VPNs but has no分摊.
Q4: Can I avoid分摊?
A4: No, but trading during low-volatility periods reduces分摊 likelihood.
Q5: How does 20x leverage differ from 10x?
A5: It doubles position size, not profit percentage—use cautiously.
Final Thoughts
OKEx’s liquidation system, while initially counterintuitive, creates a sustainable ecosystem for crypto derivatives. By mastering its mechanics—especially loss分摊 and settlement timing—traders can navigate volatility strategically. Always remember: in futures, capital preservation precedes profit chasing.