Huobi DM was launched in December of 2018. This was on the back of the successful expansion of the main Huobi exchange. Huobi is one of the largest crypto exchanges in the space which launched in 2013.
Huobi has global offices in Asia, Europe & the Americas. Apart from the derivatives exchange they also have their main spot exchange as well, mining pools, OTC desks, and Huobi cloud – so quite an extensive list.
When it comes to the Huobi derivative instruments, they offer futures and perpetual swap instruments. These are leveraged up to a maximum of 20x on the futures and 125x on the swap instrument.
Since the launch of Huobi Derivatives, they have been quite successful in growing their trading volume. For example, over the last 24 hours there was a total of $9 billion in volume that was traded on the platform.
Huobi DM provides this trading functionality through numerous platforms. These include the likes of their web trading interface as well as their PC clients and mobile applications.
Is It Safe?
This is perhaps one of the most important questions that one can ask before they are using a new exchange and it is the reason that it is our main criteria.
With the Huobi derivatives exchange, the expertise and security at the main exchange no doubt plays into the measures that are in place on the derivative exchange. Let’s take a look at some of them.
Exchange Security
Huobi operates a hot and cold wallet storage procedure. This means that they keep the vast amount of their coin holdings in an offline environment away from hackers. They then have a smaller percentage in “hot” wallets with multisig capability.
They also operate a decentralized server structure around the world which can ensure uptime irrespective of whether one of the servers goes down. You can think of this as effective load balancing.
Finally, they have anti DDoS measures in place. We all know that crypto exchanges are prime targets for Denial of Service attacks and it can be quite frustrating when these are perpetrated in peak market times.
Risk Management
This is specific to the derivatives exchange. They need to have safeguards in place in order to manage the risk that comes from severe market movements when the traders are using significant leverage.
This is why Huobi DM operates an insurance fund. This is something that is used by a number of other exchanges as well and helps to protect the trading pool in case a liquidation does not take place above the bankruptcy.
Communication
All communication with the Huobi servers is done through a 256 Bit SSL encrypted connection. This means that all your private data including your passwords and KYC information is hidden from prying eyes.
This can also be a great way for to identify potential phishing attempts. If you land on a page that does not have the secure padlock in the browser it means that you should leave immediately as they will use your private info.
Account Security
Often times, we are the weakest link in our own security. That is why Huobi have provided a number of tools to secure your accout and prevent intrusion.
The first and most important measure that they have is two factor authentication. This means that when you log in you will have to confirm the login on your phone. This can either be done via SMS or through Google Authenticator. We would suggest the latter to avoid sim swap fraud.
Assets & Instruments
As mentioned, there are two types of instruments that you can trade on the Huobi derivatives platform. These are your traditional futures as well as the perpetual swaps or futures.
With these instruments, you are trading crypto on margin. This means that they are leveraged and your exposure is often many multiples of the amount that you have put down as collateral.
So, for example, if you have an initial margin requirement of 2% it means that you have leverage of 50x. If Bitcoin moves by $1 your notional position will move by 50 times more than that.
Now that you have a brief understanding of leverage, let’s take a look at the instruments on offer at the Huobi exchange.
Futures
Futures are instruments that allow the holder to buy or sell some asset in the future. Essentially, you are trading some future price of the instrument on the chose delivery date.
With the futures instruments, you have leverage options of 1X, 5X, 10X and 20X. These are on 9 different cryptocurrency assets including Bitcoin, Ethereum, EOS, Litecoin, Bitcoin Cash, XRP, Etheruem Classic, Tron & BSV.
In terms of expiry dates, they have weekly, bi-weekly and Quarterly which settle every Friday. When it comes to the specifics of the contract, they differ according to which asset is being traded. Here are some examples:
- Bitcoin: Face Value of $100 and min price change $0.01.
- XRP: Face Value of $10 and min price change $0.0001.
- TRX: Face Value of $10 and min price change $0.00001.
- All Others: Face Value of $10 and min price change $0.001.
You should also take a look into the contract specifics in the Huobi docs. This includes such information as the index reference for the prices as well as your last trading price. The latter can only be done up till 10 minutes before the expiry.
It is also important to point out though that although these are futures instruments on the asset, they are only delivered in the difference in digital asset prices. So essentially, to physical delivery will take place.
Swaps
Perpetual swaps are leveraged instruments that do not have have a delivery date. They are marked to market everyday and settle 3 times a day. They are sometimes also called “perpetual futures” at other exchanges.
The reason that they are called “Swaps” at Huobi Derivatives is because you are swapping the returns of one asset for the returns of another. Here, you are swapping crypto returns for returns on the US dollar.
Given that you are doing this, you will have to pay a funding rate. This is used to make sure that the perpetual swap price is anchored to the spot market. When it is positive you will have the longs paying the shorts and vice versa for negative.
At Huobi DM, the Perpetual swaps have leverage up to 125x and they are written on 5 different assets. These are Bitcoin and Ethereum with other coins to be added soon.
Huobi Derivatives Fees
This is another really important consideration for any trader. The fees that you pay directly impact on your trading profitability in the long run.
Huobi operates what is called a “maker taker” model for their fees. This basically means that they will offer different fees based on whether you are making or taking liquidity.
The fees will also differ depending on whether the instrument is a Future or a swap. So let’s look at this shall we?
Futures
There are three fees in the Futures fee schedule. These are the maker, the taker and the delivery. The delivery fee is that which is paid if the underlying asset is actually delivered to you.
For the standard fee structure, all Maker fees are 0.02% and all taker fees are 0.03%. Bitcoin futures have a delivery fee of 0.015% whereas all the others futures instruments will have a delivery fee of 0.05%.
If, however, you are a trader that can provide significant volume to the platform then you can apply to be a market maker. This will actually see you getting a rebate at the maker rate depending on the level of volume that you are doing.
You also have the chance to apply for being a VIP client. This is reserved for those traders who come from other platforms over to the Huobi DM exchange. There are also different tiers here although you should note that the rates are not as lucrative as those of the market maker.
Perpetual Swaps
When it comes to the perpetual swaps, the maker fee is 0.02% for all pairs and it is 0.04% for the taker fee for all crypto. There is no delivery fee as these are perpetual swaps with no underlying delivery.
As is the case with the futures, Huobi has different fee tiers for those who are either VIPs or those who are providing significant liquidity to the exchange.
In general, the fees on Huobi DM are about in line with those of other futures exchanges such as ByBit or OKEX. They do offer slightly better maker rebates to those of you that are providing the required liquidity to be in this tier.
When it comes to any other fees on the network, you will have withdrawal fees which are basically just miner network fees. These are minimal though and are not charged on the exchange side.
Deposits & Withdrawals
If you want to fund your futures acccount, you will have to transfer funds over from your spot account. In your spot account, there are a number of ways in which you can buy crypto with fiat.
You can use a card or you can fund through wires in numerous different cryptocurrencies. You can also elect to do an OTC transaction with one of the numerous sellers that they have listed in their marketplace.
You can think of this OTC market as akin to the likes of Local Bitcoins. You can view all the stats for these sellers and then you can choose those that have the best deal terms for you. These dealers have options such as Wires, Alipay, Western Union, SWIFT etc.
Huobi DM Futures Platform
When it comes to trading, you need the right tools to operate with. This is where the Huobi futures and swap platforms come into play.
The platform is near identical when it comes to layout for the futures and the swaps. They will only differ in the way of the functionality and the assets that you can trade with these instruments.
The layout is pretty intuitive and easy to find your way around. On the left you have all the markets that you can trade. In the middle you will have the chart, to the left you have your order books as well as previous orders. Then, below the charts you have your order forms. Immediately below that are all your past orders and positions.
When it comes to the charts, there are three different options for you. These are either the standard Huobi chart, the market depth chart or the tradingview chart. For those of you who don’t know, Tradingview is one of the best charting packages on the market. It is often used by technical analysis traders.
Huobi Apps
While you do have the online trading interface, Huobi does have computer programs and mobile apps that you can use.
I found that the PC programmes were more functional as they did not have to rely on the PC browser and were hence much faster. They also have better charting and you are in more control of your trading parameters. These programs are available on Windows and Mac devices.
However, if you are a trader that is always on the go, that is where the Huobi mobile apps come in. These were developed for the main exchange but you can switch to the derivative markets on the futures and swaps platform.
This was a pretty well designed application and you have one-touch ordering as well as some basic charting functionality. The app is available in iOS and Android and you can head on over to the respective app stores to get a sense of the feedback.
Community & Education
While some brokers like to leave their traders to their own devices, others like to give them some handy guides and educational resources to improve their trading. This is where Huobi tries to make an exception.
Perhaps the quickest way to learn about how to use the Huobi platform is through their instructive videos. These are their “contract trading 101” videos that are quite well presented and are clear enough for people with varying degrees of experience.
These include such videos as:
- What is digital asset trading?
- How to open trades
- Leverage
- Margin Mechanism
- Spot & Contract Trading
If you wanted more in-depth overviews then you can check out the additional guides and resources. These go over similar topics but use instructive examples and are pretty comprehensive.
Final Word
So, in summary. We really liked the Huobi futures products. It is not only highly functional but is also secure and leverags the expertise that the team have at the main Huobi exchange.
For the futures instruments, there is a decent range of assets and leverage. Markets are also pretty liquid and these are all traded on a simplistic yet technically able trading platform. It’s also great that you can trade on PC programs and mobile apps as well.
