How does control trading risks?
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 Equity100%
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.
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 price1+2% (the highest price beyond the price limit), order will be invalid; For short positions, when order price in lower than Spot Index price*1–2% (the lowest price beyond the price limit), order will be invalid.
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