1.Risk Limit Concept


“Risk limit” here is a risk management measure used to prevent large liquidation incidents. Coinstore applies Risk Limits on all trading accounts to minimize the occurrence of large liquidation on margined contracts.


With the increase of risk limit, the requirements of maintenance margin and initial margin will also be stepped up (i.e. step model margin). The system will automatically increase or decrease the risk limit according to the user's position and open order, and the margin requirement will increase or decrease with the change of the risk limit.


2.Risk Limit Step:

3.Risk Limit limitation:


4.Applicable scenarios:

The management backend sets the risk limit ladder and corresponding initial margin rate and maintenance margin rate.


When a trader places an order, the system will calculate the risk limit according to the trader's position and open order quantity, and match the corresponding initial margin rate and maintenance margin rate according to the ladder.


5.What is the relationship between margin and risk limit


Each contract has a base margin risk limit and incremental amount. These figures combine the base maintenance and initial margin requirements and are used to calculate the margin requirements for each position.


With the increase of positions, the requirements of maintenance margin and initial margin will also increase. When the user's position reaches the next level of margin risk limit, the system will automatically adjust the user's margin requirements, which will increase or decrease with the change of risk limit.


According to the position leverage to set the maximum size of positions, and the maintenance margin is calculated according to the actual size of positions.


6.Position limit


To control extreme risk, the Coinstore futures will set position limits for all contracts. When placing an order, the position plus opening commission (in the same side) exceeds the position limit, the order cannot be placed. Limit of each order: in order to avoid the unexpected impact of similar events on the market, the Coinstore futures limits the quantity of each order, and if the order exceeds the limit, it will not be submitted.


7.Number of open orders - normal orders


A large number of open orders will increase the burden of the system. The Coinstore futures will allow each user to have 10 open orders on each contract.


Sincerely

Coinstore Team


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