DigiFinex contract operation process

DigiFinex's contract operation process involves order placement, matching, execution, margin calculation, position management, settlement, and risk management to facilitate seamless contract trades.

Nov 27, 2024 at 12:41 am

DigiFinex Contract Operation Process: A Comprehensive Guide

Introduction

DigiFinex, a renowned cryptocurrency exchange, has established a robust contract operation process to ensure the smooth and efficient execution of contract trades on its platform. This comprehensive guide will delve into each stage of the contract operation process, shedding light on the intricacies of contract trading and providing traders with a thorough understanding of how their orders are processed.

Step 1: Order Placement

Traders initiate the contract trading process by placing an order through the DigiFinex trading interface. This order specifies the following parameters:

• Contract Type: Traders select the desired contract type (e.g., perpetual or futures).
• Symbol: The underlying asset for the contract (e.g., BTCUSDT, ETHUSDT).
• Direction: Long (buy) or Short (sell) position.
• Leverage: The level of leverage to be applied to the trade.
• Quantity: The number of contracts to buy or sell.
• Price: The desired order execution price.

Step 2: Order Matching

Once an order is placed, it enters the order matching engine. The matching engine scans the pool of available orders and matches them based on matching parameters. For example, a buy order may be matched with a sell order at the same price level.

Step 3: Order Execution

Upon successful matching, the order is executed at the established price. The trader will receive confirmation of the executed trade, including details such as the execution price, quantity, and trade ID.

Step 4: Margin Calculation

For leveraged trades, the required margin is calculated based on the contract's parameters (e.g., leverage, quantity, underlying asset price). The margin is deducted from the trader's account balance and acts as collateral for the leveraged position.

Step 5: Position Management

Traders can actively manage their open positions on the DigiFinex platform. Adjustments can be made to the leverage or positions can be closed partially or fully.

• Adjusting Leverage: Traders can modify the leverage of their open positions, subject to certain limits and risk parameters.
• Closing Positions: Traders can close their positions by placing an opposite order (e.g., buy to close a long position, sell to close a short position).

Step 6: Settlement

Futures contracts have expiry dates, upon which the contracts expire and are settled. The settlement process involves the transfer of the underlying asset from the seller to the buyer, or vice versa, depending on the direction of the position.

• Physical Settlement: For physically settled contracts, the underlying asset is delivered to the trader at the settlement date.
• Cash Settlement: For cash-settled contracts, the difference between the contract price at settlement and the spot price of the underlying asset is settled in cash.

Step 7: Risk Management

DigiFinex implements robust risk management measures to safeguard the interests of traders and the overall stability of the platform. These measures include:

• Margin Calls: Traders are notified when their margin falls below a certain threshold, prompting them to add additional margin or reduce their position.
• Liquidations: If a trader fails to maintain sufficient margin, their position may be liquidated to cover losses.
• Price Banding: Automated systems monitor price fluctuations and may adjust leverage levels to mitigate excessive volatility risks.

Conclusion

The DigiFinex contract operation process is an intricate and well-designed system that ensures the seamless execution of contract trades. This guide has taken a step-by-step approach to explain each stage of the process, from order placement to settlement. By understanding the intricacies of this process, traders can navigate the contract markets effectively and make informed trading decisions.