What is Pre-Market Perpetual Trading

Pre-Market Perpetual Trading is a financial product that allows users to trade the Perpetual contracts (denominated in USDT) of a coin before it is listed on Bybit Derivatives. Pre-Market Perpetuals allow users to speculate on the price and liquidity of up-and-coming tokens before these tokens are open to the public on Bybit.

 

The position limit for Pre-Market Perpetual trading is $250,000, with up to 5x leverage. 

Key Advantages

• Provide an opportunity to get a jump on the hype around new contracts before their official launch. 

• Potential to tap into the volatility of trending tokens.

• The positions held in Pre-Market Perpetuals will be retained in standard Perpetuals trading once the contract is listed on Bybit Derivatives. 

How It Works

Pre-market Perpetuals currently support Isolated and Cross Margin mode in Unified Trading Account. 

Pre-Market Perpetuals Phases

 

Phase I 

Call Auction: At the start, traders submit orders that enter an order book. These orders aren't immediately matched. Instead, the platform gathers all orders before the call auction opens, and finds the price where most buyers and sellers agree to ensure that the maximum number of orders can be matched during the Call Auction.

 

Please note that traders can only place Good-Till-Cancel limit orders. During the entire call auction phase, traders cannot modify their orders, including setting conditions for TP/SL or modifying order price and quantity. 

 

Auction 1 (50 Minutes):

• During this phase, traders can place or cancel their orders.

• Est. Opening Price: Calculated every minute for the first 40 minutes and every five (5) seconds for the next 10 minutes.

• Price Limit: In the first 40 minutes, the minimum price of an order should not be lower than 0.5 times the price recommended by the market maker. In the next 10 minutes, the maximum buying price should not be higher than 1.1 times the last Traded Price (LTP), and the minimum selling price should not be lower than 0.9 times the LTP.

 

Auction 2 (5 Minutes):

• During this phase, traders can place but cannot cancel their orders.

• Est. Opening Price: Calculated every five (5) seconds throughout the five minutes.

• Price Limit: The maximum buying price should not be higher than 1.05 times the Last Traded Price (LTP), and the minimum selling price should not be lower than 0.95 times the LTP.

 

Price Matching (5 Minutes):

• Price Matching commences when a minimum order depth is reached. The minimum depth required is at least 10 orders on either side (buy and sell) to be present in the order book.

• Traders can no longer place or cancel orders during the price matching phase. 

• Mechanism: Before the official market opens, pre-market perpetual contracts utilize an indicative price provided by a market maker. During the price matching phase, the system prioritizes finding a price that will generate the highest combined buy and sell order volume. However, if multiple price levels have identical maximum volumes, the system will then favor the price closest to the initial price recommended by the market maker. This helps ensure a smoother transition to the regular market price.

• Outcomes:

  • Failed: If there are less than 10 orders on either side (buy or sell) in the order book before the price matching phase begins, the auction will fail. All orders will be canceled, and the contract will not be listed on Bybit.

  • Successful: If there are at least 10 orders on either side in the order book, Price Matching will start. All matchable buy and sell orders will be fulfilled at the auction price. Unfulfilled orders will remain in the order book, and traders can cancel their unmatched orders during the continuous auction phase.

• Fee Structure: Zero fees

Phase II

Continuous Auction: During this period, the system supports Limit, Market, and Conditional orders, TP/SL, Post-Only, Good-Till-Cancel, and Reduce-Only. The Continuous Auction phase is similar to standard Perpetual trading, except for the Index Price calculations. 

 

• Index Price: The index price for pre-market perpetual is calculated using the same method as the standard Perpetual Contract under extreme circumstances. In extreme market conditions, Bybit may be unable to obtain a reasonable spot price from any exchange, including its platform. To ensure the rationality of the index price under such circumstances, the index price will be calculated from the last traded price of the Perpetual Contract. For more details, please refer to here.

• Fee Structure: 

   

  
  

  	Maker Fee	Taker Fee
  VIP 0	0.0400%	0.1000%
  VIP 1	0.0360%	0.0800%
  VIP 2	0.0320%	0.0700%
  VIP 3	0.0280%	0.0600%
  VIP 4	0.0240%	0.0500%
  VIP 5	0.0200%	0.0500%
  Supreme VIP	0.0000%	0.0450%
  Pro Users	Follow the Standard Perpetual Trading Fee Rate

   

Phase III

Transition to Standard Perpetuals:

Pre-Market Perpetual contracts will transition to standard Perpetuals trading when the symbol is listed on at least three (3) CEXs' Spot Market. Once a Pre-Market Perpetual contract turns into a standard perpetual contract, the trading fee structure will follow the standard Perpetual and Futures trading fee rate, according to the VIP and Pro levels respectively.

 

However, the transition may entail adjustments in risk parameters and index price components. All adjustments will be announced separately. 

 

Perpetual trading will not be affected during the transition. Active orders and existing positions will be retained. Pre-transition orders that are fulfilled after the transition will be subjected to updated fee rates.  

Risks

Lower Liquidity

• Pre-market trading hours typically see fewer participants compared to regular market hours. This translates to a thinner order book, meaning fewer buy and sell orders available to match your trades.

• Lower liquidity can lead to wider bid-ask spreads.

• It can also make it harder to enter or exit positions quickly, as there might not be enough counterparties available to take the other side of your trade.

 

Price Volatility

With fewer participants, the market becomes more susceptible to price swings based on even small order imbalances. 

 

Funding Rate Fluctuations

• Due to the potential lack of an index price during the Continuous Auction phase, funding rates can fluctuate and eat into your profits or even lead to losses if not properly managed.

 

Tracking Errors

• Perpetual contracts aim to track the price of the underlying asset, but there can be discrepancies due to various factors like funding mechanisms and market inefficiencies. These tracking errors can amplify your losses if the perpetual contract price deviates significantly from the actual spot price of the underlying asset.

Liquidation

Pre-Market Perpetuals only supports Isolated and Cross margin mode under UTA, hence UTA liquidation rules apply.

 

Scenario 1: UTA liquidation before the Price Matching phase

If liquidation happens in your UTA, all Pre-Market Perpetual orders associated with the account will be automatically canceled. 

 

Scenario 2: UTA liquidation during the Price Matching phase

The system will attempt to cancel your Pre-Market Perpetual orders. However, if your UTA liquidation happens after your Pre-Market Perpetual orders are matched, your Pre-Market Perpetual positions will be closed to reduce the liquidation risk.

 

Scenario 3: UTA liquidation during the Continuous Auction phase

The system will reduce the limit tier based on liquidity in order to release the required margin amount through liquidation. Your Pre-Market Perpetual positions may be forcibly closed to reduce your account’s liquidation risk.

Difference between Pre-market Trading (Spot) and Perpetuals