2024-06-10 12:34:46To improve trading efficiencies and protect traders from market manipulation, Bybit has implemented the following order execution limits for Derivatives trading. This article will outline the trading parameters that you should be familiar with in Derivatives trading, and traders can view the parameters for each contract from the Derivatives Trading Rules page.
1. Tick Size
The tick size is the smallest increment/reduction of price movement possible.
For example, the BTCUSDT Perpetual contract has a tick size of 0.1. This means if the current price is 68,592.10 USDT, and someone wants to offer more for it, the trader would have to bid, at a minimum of 68,592.20 USDT.
2. Maximum Market/Limit Order Size
This sets the maximum quantity allowed per order for each contract. Different maximum sizes are established for limit and market orders within the same contract. The maximum size for limit orders is larger than market orders, making it easier to place larger limit orders. Meanwhile, lower limits are imposed on market orders to effectively manage price impact and market risks.
For instance, let's consider BTCUSDT. The maximum order size for market orders is 100 BTC, while for limit orders, it's 155 BTC. This means that the maximum quantity allowed for placing a market order in BTCUSDT is 100 BTC, and for a limit order, it's 155 BTC.
3. Minimum Notional Value/Order Size
To ensure the efficiency of the trading system, orders that do not meet the minimum notional value or minimum order size required will not be accepted.
The minimum order size indicates the preset minimum quantity that can be placed per order. As for the minimum notional value, it is used to calculate a minimum order value corresponding to the order quantity by using the minimum notional value or minimum order size.
Hence, the overall minimum order size that can be placed per order is determined as follows:
Min. Order Quantity = Max (Preset Min. Order Size, Min. Notional Value/Order Price)
whereas,
Limit Buy Order Price = Min(Order Price, Last Price x 1.05)
Limit Sell Order Price = Max(Order Price, Last Price x 0.95)
Market Order Price = Last Traded Price (LTP)
For example, BTCUSDT has a minimum notional value and minimum order size of 100 USDT and 0.001 BTC. The last traded price for BTCUSDT is 60,000 USDT. The minimum order quantity for the BTCUSDT market order will be Max (0.001, 100/60,000) = 0.002 BTC (rounded up).
Notes:
— The figure calculated through minimum notional value or minimum order size will be rounded up to match the precision of the minimum order size.
— Closing orders and orders from Inverse Contracts (both open and close orders) will not be restricted by the minimum notional value but still be subject to the preset minimum order size.
4. Price Limit
To protect traders from market manipulation, Bybit has established a contract price limit for Derivative trading. These limits apply to both opening and closing positions, excluding Take Profit/Stop Loss (TP/SL) orders.
If a trader sets a buy order price above the maximum permissible bid price, the system will automatically adjust the order price to the highest bid price allowed. Similarly, if the sell order price falls below the minimum permissible ask price, the system will auto-adjust the order price to the lowest ask price allowed.
For example, if the price limit is set at ± 5%. This means the highest bid price would be calculated as the last traded price × (1 + 5%) and the lowest ask price as last traded price × (1 - 5%).
Assuming Trader A places a BTCUSDT buy long limit order with an order price of 66,000 USDT. The current last traded price is 60,000 USDT. With the price limit of 5%, the highest bid price that can be placed is 63,000 USDT (60,000 x 1+5%). As a result, the system will correct the order price from 66,000 USDT to 63,000 USDT automatically when Trader A places the order.
Since the order price is placed at a worse price compared to the best ask price, this order is executed immediately. Assuming Trader A uses a GTC(Good Till Canceled) time-in-force order execution strategy, if the price surges rapidly to 66,000 USDT, and there is only half of the contract quantity filled at 63,000 USDT, the remaining contract quantity will persist in the order book to await execution.
5. Position Limit
The position limit indicates the maximum contract quantity of the respective contracts that can be held by each user, including the total quantity held from both the Main Account and Subaccount. It is calculated in real-time based on the current open interest multiplied by the maximum percentage of open positions held by each user.
For instance, if the position limit for BTCUSDT is 2,762, it means the maximum contract quantity that can be held is 2,762 BTC per user. To learn more about open interest, please visit Open Interest Limit (Perpetual and Futures Contracts).
6. Take Profit/Stop Loss (TP/SL) Price Protection
TP/SL Price Protection protects traders from extreme market conditions and mitigates the risk of triggering TP/SL orders at unintended prices during periods of high market volatility. This is only applicable to TP/SL using the last traded price as the trigger reference price on Perpetual and Futures contracts.
Each contract has a corresponding price protection threshold. After enabling the Price Protection function, it will prevent TP/SL from being triggered even when the last traded price has reached the trigger price if the spread falls out of the protection threshold, until the spread returns within the protection threshold.
For example, assuming the threshold is set at 5%. The market experiences a period of extreme volatility, creating a significant disparity between the mark price and the LTP with a spread of around -5.4%. With TP/SL Price Protection enabled, the TP/SL order will be blocked from being prematurely triggered, as, in this case, the spread (-5.4%) exceeds the protection threshold. The TP/SL order will only be triggered again once the spread returns to the protection threshold and the price trigger is met.
For more details, please refer to TP/SL Price Protection.
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