Explain this trade, earn my respect

[CristianOff]

Can someone explain Binance Futures and why its graph is different from Binance Classic, Bitfinex, Kraken, etc?

I just noticed that on Binance Futures, pair ETH/USDT on 1D candles, on 13th March 2020 there is one candle  between
with low $84.23 and high $323.0



This massive price gap does not appear anywhere else, not on Bitfinex, Kraken, not even on Binance's Spot Classic Trading



I looked on Bitmex.com (binance futures competitor) and their chart is the same as in Binance Classic, Bitfinex, Kraken, etc.
Can someone explain if I'm missing something!?

[pixie85]

Candles with long wicks appear when theres a big trade in that time period but it closes at the level of the candle.

Someone did a large purchase but the majority of purchases on that day were much lower.

Such wick doesn't show on other exchanges because it's the candle closing that counts for the indexes so nobody cares if an exchange wicks above or below the average.

[crwth]

The main difference between the SPOT price and the FUTURE Price is that spot price is the one with immediate buying and selling of an asset while future contracts delay the payment and the delivery between that "future" date. So basically, the future price will always the spot price in terms of range, but it could depend on the people who are trading on the futures.

There are a lot of factors that could lead to that type mainly

• Leverage
• Holding of positions has fees
• Hedging

There could be a lot of reason with that possibility that people are leveraging and hedging the current market, but since the SPOT market is dictating the direction or the actual result of the Supply and Demand it would follow soon.

[logfiles]

Happens all the time in Futures markets, where the price goes adrift from that of the spot market especially when the market becomes volatile.
One major reason is because of Liquidation of positions held. Most traders end up setting stop losses to avoid getting their positions liquidated there by even slight market movements trigger positions to close (buying or selling of contracts).

Stop losses can be used in spot markets but most are triggered when price starts to consistently move on a given trend unlike Futures where even a 2% movement can trigger stop losses of traders who have opened up positions with x10 X25 leverage.

That's why we see such long wicks in futures as the price quickly tends to correct as things normalize.

[Gafman]

Just a difference between the FUTURES and the SPOT market i believe that happened due to the leverage of a massive buyer

[CristianOff]

Thank you guys. I also understood that Binance don't use futures price for liquidation so I believe it didn't affect many people.

[Gozie51]

And I believe platforms or channels, brokers too don't appear to operate in same way. They can have different parameters and including time zones which could affect the platform activities. Sometimes too, leveraging could be manipulated.

[shollyen]

Candles with long wicks appear when theres a big trade in that time period but it closes at the level of the candle.

Someone did a large purchase but the majority of purchases on that day were much lower.

Such wick doesn't show on other exchanges because it's the candle closing that counts for the indexes so nobody cares if an exchange wicks above or below the average.

To be more specific. Immediately after the price drop seen in the candle before, futures up to $323 were bought in the timeframe of the next candle (here 1d).
A possibility here might have been that someone made a missclick with a big lever and ordered $323 instead of $32.3. As the market price remained much lower, the futures price fell back to the lower value.

This exactly is my thought on what happened. It could be that the trader mistakenly put out a figure he never intended to use, which is never applicable or in any way close to what happened on other platforms. Also, the volume might not be much, but with a very high price, compared to the general market price. This most times happens immediately and might be within a microsecond.

[devlin85]

In binnace future we trade future contract of many crypto currency. If you see very carefully then  there is MARK PRICE.,which indicates that on this price the current contracts are traded. I noticed sometimes tthe price of eth is running at 180 but that contract sold at 180.90 or sometime 179.35 or around it.
In recently pump of btc the price went to the 7738 in spot market but in future it went over7802. So that's why this kind of things happen in future. I hope this information will help you to understand this concept.

[logfiles]

Thank you guys. I also understood that Binance don't use futures price for liquidation so I believe it didn't affect many people.

I have never done any futures trade in Binance  but i believe just like any other platform such as Bitmex or bybit, they use the index price(average price in a selected number of exchanges, usually 3 or 5 of them) to liquidate positions. This prevents such catastrophes from happening in case a price drops or spikes in only one exchange

But if one has placed a stop loss that is triggered based on the Mark price or Last traded price of the exchange. The stop loss will close your position with that abnormal spike.