Tagged “derivatives”
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What open interest counts
Open interest counts contracts outstanding, not trades. Two identical trades can raise it, lower it, or leave it alone, depending on who was closing.
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What a liquidation actually is
A liquidation is the venue closing a position because margin fell below a threshold. It is a forced order, not a price guarantee, and it has its own cost.
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Perpetuals and the funding rate
A futures contract with no expiry needs something to keep it near spot. Funding is that mechanism: a payment between traders, not to the venue.
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Linear and inverse contracts
The currency a contract is sized and settled in changes the shape of its payoff. One is a straight line in the quote currency and the other is not.