BITCOIN AIRFX TRADING
This is an explanation of Bitcoin AirFX trading, types of trading that can be engaged in through Zaif Exchange.
Please read the explanation below carefully before engaging in either of these types of trading.
Bitcoin AirFX trading on Zaif Exchange
Bitcoin AirFX on Zaif Exchange is a derivative product linked to the spot price of a currency/virtual currency pair prescribed by us.
For Bitcoin AirFX trading, there is no liquidation deadline or automatic liquidation as a result of such a deadline arriving.
Bitcoin AirFX trading works by ensuring the trade price is as close as possible to the spot price by generating swap fees between users (funding) at fixed intervals based on the deviation from the spot price of a currency/virtual currency pair prescribed by us.
Furthermore, as it is not a spot trade, mid-trade transfers of virtual currencies or adjustments of positions by spot delivery (i.e., actual receipt/actual delivery) cannot be made.
Engaging in Bitcoin AirFX trading requires payment of a swap fee, prescribed by us, in addition to daily fees and a margin.
There are no trading fees charged on Bitcoin AirFX trading on Zaif Exchange.
Negative fees (i.e., trading bonuses) do not apply to orders for Bitcoin AirFX trades, or on liquidation orders for either of the foregoing.
In Bitcoin AirFX trading on Zaif Exchange, a daily fee, prescribed by us Daily fees, is incurred either on the price determined when a purchased or sold position is executed or on the value of the position held by the customer,and the daily fee is added for one day every 24 hours.
The daily fee incurred is deducted from the margin deposited by the customer when liquidating a Bitcoin AirFX trade order, and adjustments are made by repaying the amount of money that reflects the profit or loss incurred from the trade.
Bitcoin AirFX trades will incur a swap fee, prescribed by us and charged every two hours, if the Bitcoin AirFX price deviates from the spot price.
Swap fees are paid in accordance with our prescribed methods from positions attempting to expand the deviation from the spot price against positions attempting to rectify the deviation from the spot price.
The swap fee increases the larger the deviation from the spot price is, and if there is no deviation, then only a daily fee charged to both the seller and the purchaser is paid to us.
We give Swap fee sequentially, and it may take time depending on the situation. Please liquidate after confirming that you have gotten swap fee.
Leverage and margin
The amount of margin that is required for Bitcoin AirFX trading fluctuates depending on the trading conditions of virtual currencies, and an amount in line with the order quantity and the leverage ratio is required.
In accordance with our prescribed methods, the margin is, in principle, taken from the customer’s account balance in Japanese yen. However, if the customer’s account balance in Japanese yen at the time an order is made is not sufficient to cover the amount of the margin prescribed by us but a virtual currency (BTC, XEM, or MONA) can be used to deposit the amount equivalent to the shortfall of the margin, then an amount of BTC, XEM, or MONA equivalent to the shortfall will be automatically deposited as the margin, calculated in accordance with our prescribed exchange rate.
Furthermore, the leverage ratios that can be used may change based on promotional campaigns or the market situation.
If the maintenance margin rate falls below 30%, this will trigger a Loss-cut and positions will be forcibly liquidated and automatically cancelled.
The maintenance margin rate is calculated using the following formula:
(Deposited margin ± unrealized profit or loss (marginal profit or marginal loss and incurred daily fees)) ÷ deposited margin × 100(%)
EPS（Early Profit Settlement）
For positions with unrealized profit, forced liquidation may be executed against other positions for which there is the possibility of losses greater than the deposited margin arising, due to reasons such as sudden fluctuations in the market price.
Zaif calls this feature “EPS (Early Profit Settlement)” and it is in place to ensure that no user has to provide additional margin collateral.
Call for additional margin collateral
For Bitcoin AirFX trading, customers are never asked to provide additional margin collateral (a so-called margin call) because of this EPS (Early Profit Settlement) feature.
When liquidating a position arising from a Bitcoin AirFX trade, the difference between the liquidation price and the price determined at the time of purchase or sale is the profit or loss; however, if the liquidation price fluctuates in the direction that disadvantages the customer, then the customer may incur a loss.
Leveraging in Bitcoin AirFX trading carries a high risk. The higher the leverage ratio is, the greater a trade can be in comparison with the amount of funds actually invested (including the amount of the margin deposited) and therefore, while you can potentially expect great profit, it can also result in a great loss if the market price differs to what was predicted.
Profits or losses are not confirmed until a liquidation order is made; however, forced liquidation could possibly be executed in accordance with the Loss-cut rule described above.
Furthermore, note that even in cases where a Loss-cut has been triggered, the liquidation price is influenced by market conditions; therefore, it means that there is no guarantee that 30% of the margin will remain, and there is the possibility of a customer incurring a loss that exceeds the maintenance margin rate of the margin he or she has deposited.
As stop-loss orders are also influenced by market conditions at the time, similar to a Loss-cut, it means that liquidation of stop-loss orders won’t necessarily be at the price that was set.
In Bitcoin AirFX trading, an opposing trade for a customer’s position can be made difficult by market trends, trading volumes, and the like, and there is the possibility of a greater loss.
Please refer to the [“Explanation of Easy Trading and Orderbook Trading（Document for Delivery Prior to Conclusion of Contract）” section of the document “Explanations on Our Services”] for other risks associated with trading of handled virtual currencies.