Introduction to Inverse Contracts
Q) What is an inverse perpetual contract?
A: The Inverse perpetual contracts use BTC/ETH/EOS/XRP as the base currency. Traders need to confirm traded quantities in terms of USD (Quoted currency) and then use their base currency (such as BTC, ETH) to calculate margin, profit, and loss. If a trader wants to trade a BTCUSD contract, he must use BTC as his base currency. If he trades on ETHUSD contracts, he needs to hold ETH.
Q) What type of coins do I need to deposit to trade inverse perpetual contracts?
A: Trading inverse perpetual contracts require BTC, ETH, EOS, or XRP for the respective coin's trading pair. However, traders may deposit any cryptocurrencies currently supported on the Bybit platform and utilize the Asset Exchange function to obtain the required asset needed to trade the respective trading pairs.
To find out how to use the Assets Exchange function, please click here.
Q) Can I hedge my position when trading inverse perpetual contracts?
A: At the moment, no. For example, When a trader is holding a buy long position, the execution of a sell short position within the same contract quantity will automatically be considered as a closing order for the buy long position.
Likewise, while holding a buy long position, the execution of another buy long order will automatically combine with the existing buy long position to form a larger buy long position with a new average entry price.
However, it is possible to hedge your coins in USD value by either
(a) Using Asset Exchange to swap your coins to USDT
Inverse Contracts Order Limits
Q) What is the highest leverage that I can use when trading inverse perpetual contracts?
Q) What is the single minimum order size I can place for inverse perpetual contracts?
A: The smallest contract size for all trading pairs per order is 1 USD
Q) What is the single largest order size that I can place for inverse perpetual contracts?
A: The largest contract size per order is 1,000,000 USD in contract quantity, capped at the lowest contract value of the respective coin's lowest risk limit. Please refer to the table below for the lowest risk limit
|Lowest risk limit||150 BTC||300 ETH||50,000 EOS||750,000 XRP|
Q) What is the largest position size that I can hold for inverse perpetual contracts?
|Position value||1500 BTC||30,000 ETH||500,000 EOS||7,500,000 XRP|
Q) How many active limit and conditional orders can I place on the inverse platform?
A: Active limit orders = up to 500 orders, but only 50 will be displayed inside your Active tab and trading chart
Conditional orders = Up to 10 orders.
Q) What are the minimum and maximum funding rates for inverse perpetual?
A: Funding rate minimum >= (Maintenance margin % of the first tier - Initial margin % on of the first tier) * 75%
Funding rate maximum <= (Initial margin % of the first tier - Maintenance margin % of the first tier) * 75%
Q) What is the lowest/highest price I can set for my orders on Bybit?
A: Lowest Price = 10% of Last Traded Price (LTP)
Highest Price = $1,000,000
Inverse Contracts General Questions
Q) Will increasing my leverage also increase my open position's unrealized P&L?
A: No, it will not. For more information, please visit our help center article on Unrealized P&L and unrealized P&L% of position (Inverse)
Q) How to calculate average entry price (AEP) for inverse perpetual contracts?
A: Average entry price = Total quantity of contracts / Total contract value in BTC
Total contract value in BTC = [(Quantity1/Price1) + (Quantity2/Price2) + (Quantity3/Price3)....]
A trader bought 50 contracts at 8000 USD and another 50 contracts at 9000 USD.
Total contract value in BTC = (50/8000) + (50/9000) = 0.01180555 (Truncate at 8 decimal point)
Average entry price = 100/0.01180555 = 8470.58 USD (Truncate at 2 decimal point)
Note: This calculation is only meant for illustration purposes. Traders are advised to always refer to the figures shown on their Bybit platform page.
Q) What is the difference between using Last and Mark price to trigger TPSL and/or conditional orders?
Last (Last Traded Price, LTP)
|May have slightly better control and estimation of the eventual order execution price.||May not be triggered before the liquidation of the open position||Setting up Take Profit orders|
|Mark (Mark Price)||Ensure that such orders will always trigger before the liquidation of the position.||May experience price slippages.||Setting up Stop Loss orders|
Q) Why is there a difference in order cost between Buy Long and Sell Short orders inside the order placement zone?
A: There are 2 reasons to explain the differences.
Reason 1: Difference in bankruptcy price between a Buy Long and a Sell Short order
- Buy Long direction = Bankruptcy price below entry price = higher fee to close* = higher order cost
- Sell Short direction = Bankruptcy price above entry price = lower fee to close* = lower order cost
*Fee to close refers to an amount of margin set aside by the system to ensure a position will have sufficient fees to close at its theoretical worst-case scenario (liquidation executed at bankruptcy price). This is not the absolute final amount and any excess will be returned to the trader after closing the position.
Reason 2: Differences in predicted order execution method (specific to limit orders)
- When the order price is set at a price point better than the Last Traded Price (Buy Long = Lower, Sell Short = Higher) = orders will be pending for execution inside the order book
- The system will use the order price to calculate the fee to open
- When the order price is set at a price point worse off than the Last Traded Price (Buy Long = Higher, Sell Short = Lower) = orders will immediately execute upon placement
- The system will use the estimated best available market price in the order book to calculate the fee to open
Q) Why is my conditional order successfully placed but immediately rejected after it has been triggered?
A: There are various reasons why conditional orders may be rejected after being triggered. For more details, please visit here
Q) What are the order types that can be placed on the Bybit platform and what are their differences?
|Order Types||Variables needed to place an order||Advantages||Limitations||Uses|
Leverage, Contract quantity
|Immediate order fulfillment at the best available prices inside the order book.||Does not guarantee order execution price||
Orders to enter or exit the market immediately
|Limit order||Leverage, Contract quantity, Order price||
Ability to place an order at a price point better than best bid/ask prices OR immediate order fulfillment up to order price.
|Does not guarantee order execution||
Placement of maker orders.
Exit orders to take profit
|Conditional order||Leverage, Contract quantity, Trigger price, Order Price||Ability to place a limit/market order only when the trigger price is met||Order will not be placed unless the trigger price is met||
Take Profit or Stop Loss via the TPSL function
Stop-entry orders to trade a breakout
Q) What is a trailing stop/trailing profit?
A: Bybit provides another exit option, known as Trailing Stop, which is a more flexible variation of a normal exit order. It is designed to enable a position to remain open as long as the market price is moving in a profitable direction but closes via a market order if the market price changes direction by a pre-determined price. It can be used as a trailing stop loss or trailing profit.
Example of trailing stop loss:
A trader opens a long position of BTCUSD contracts at 8,000 USD, and set a trailing distance of 500 USD.
- If the last traded price never exceeded 8,000 USD, the trailing stop will be triggered at 7,500 USD just like a normal stop loss.
- If the last traded price moves to 9,000 USD, the trailing stop price will automatically be adjusted upward by 1,000 USD (stop price can be adjusted by every 0.5USD), and the trailing stop will be triggered at 8,500 USD.
- Stop loss will be triggered only if there is any retracement of 500 USD from the highest price reached. (As seen from the diagram example below)
A: Trailing profit is achieved by setting an activation price for the trailing stop order. What it does is that the trailing stop order will only be placed when LTP reaches the activation price and subsequent execution logic will follow the diagram above.
To understand how to set up a trailing stop, please click here
Q) How to ensure that I will always open or close my position as a maker order?
A: This can be achieved by using a limit order placed at a price point equal or better than the best bid/ask prices stated inside the order book + selection of post-only function. For more information, please click here
Q) What is the use of close-on-trigger?
A: Specifically available as an additional option to conditional orders, the “Close On Trigger” function seeks to execute as a closing order that guarantees its execution regardless of margin requirements. For more information, please click here
Q) What is the difference between order history and trade history?
A: The trade history represents the historical record of actual position transactions, and the order history represents the record at the time of the historical order placement (Can be executed or non-executed order).
Q) If I have trading bonuses and deposits inside my account balance, when opening a position, what will the system use to pay for the order margin?
A: The system will use your deposits first to pay for the order margin. However, after closing the position, if there are any realized losses, it will be deducted from your trading bonuses first before deducting from your deposits.
Q) What is time in force (TIF): GTC IOC FOK?
A: When setting an order, a trader can choose different 'Time in Force' strategies to set the effective execution method of the order. Order execution strategies allow traders to have more control over their trading strategies. For more information, please click here
Q) Why are all of my ADL LED lights illuminated (depicting a high ADL ranking) even though I am using relatively low leverage and having a relatively low P&L%?
A: ADL ranking is calculated using profits percentage and effective leverage and the ranking is relative to the traders holding the same direction as your current position. What this means is that the other traders holding the same direction may either be in a losing position or making lesser profit percentages as compared to your existing position.
ADL will only be activated if contract losses cannot be fully covered by the insurance fund. Therefore, if the insurance fund is sufficient, the likelihood of ADL happening is also greatly reduced.
Q) How can I reduce my ADL ranking?
A: 1) Lowering the leverage may lower the ADL ranking in real-time.
2) Partial or fully closing your position. Partial closing the position does not lower the ADL ranking but it reduces the number of contracts that are exposed to ADL risk.