Perpetual contracts are derivative financial instruments that allow traders to speculate on the future price movements of digital assets without an expiry date. Unlike traditional futures, these contracts do not have a settlement date, enabling positions to be held indefinitely. Traders can profit by either buying (going long) if they anticipate price increases or selling (going short) if they expect declines, with all profits and losses settled in cryptocurrency.
This guide provides a detailed walkthrough for using perpetual contracts on both mobile and web platforms, covering essential steps from fund transfers to executing trades.
Understanding Account Types and Fund Transfers
Before trading, it's crucial to understand the two primary types of perpetual contracts and prepare your account accordingly.
Coin-Margined (Inverse) Contracts
In these contracts, the underlying cryptocurrency (e.g., BTC, ETH) serves as both the collateral and the settlement currency. Profits and losses are calculated and paid in the same coin. To trade a BTC coin-margined contract, you must hold BTC in your account.
USDT-Margined (Linear) Contracts
Here, USDT (Tether) is used for both collateral and settlement. This allows traders to use a single currency (USDT) to trade multiple perpetual contracts, simplifying the management of margin and P&L.
To begin trading, you must first transfer the required currency to your trading account.
On the App:
- Navigate to ‘Assets’.
- Select ‘Transfer’.
- Choose the currency (e.g., USDT).
- Transfer from your Funding Account to your Trading Account.
- Enter the amount and confirm.
👉 Explore more strategies for account funding
Configuring Your Trading Account Settings
Proper configuration of your account settings is essential for effective risk management and a smooth trading experience.
On the App:
- From the trading interface, tap the ‘More’ icon (typically three dots).
- Select ‘Trading Settings’.
- Choose your ‘Account Mode’: Simple (Contract) or Advanced mode.
- Select your preferred ‘Trading Unit’. For USDT-margined contracts, options are Coin, Contract, or USDT. For coin-margined contracts, options are Contract or Coin.
These settings dictate how your orders are displayed and executed, so choose according to your familiarity with trading concepts.
Executing a Long Position (Buying)
A long position is initiated when you predict the asset's price will rise.
1. Opening a Long (Buy) Order
On the App:
- Go to the ‘Trade’ tab.
- Tap the currency pair at the top (e.g., BTC/USDT) and select ‘Perpetual’ -> ‘USDT Contract’ -> ‘BTCUSDT Perpetual’.
Configure your order:
- Margin Mode: Choose between Isolated (risk limited to a specific position) or Cross (your entire account balance acts as collateral).
- Leverage: Select your leverage倍数 (e.g., up to 100x for BTC). Higher leverage amplifies both potential gains and losses.
- Order Type: Select ‘Limit Order’.
- Enter your desired Price and Quantity.
- Click ‘Buy/Long’ and confirm.
Key Considerations:
- Always consider setting a Stop-Loss and Take-Profit immediately after opening a position to manage risk automatically.
- Ensure you have sufficient USDT balance. If not, adjust your leverage or transfer more funds.
- Monitor the market closely, as high leverage can lead to rapid liquidation if the price moves against you.
2. Closing a Long (Sell) Position
You can close a position from two main interfaces.
On the App:
- Trading Page: Switch to the ‘Close’ tab, enter your Price and Quantity, and click ‘Sell/Close’.
- Positions Page: Go to ‘Positions’, select the specific long position, and click ‘Close’. You can enter a limit price or use a market order for immediate execution.
Using Stop-Loss/Take-Profit orders from the Positions page is highly recommended for automated risk management. For closing your entire position instantly, use the ‘Market Close All’ option.
3. Monitoring Your Open Position
After opening a position, you can track its performance in the ‘Positions’ section. Key metrics include:
- Entry Price: The average price at which you entered the position.
- Mark Price: The price used to calculate unrealized P&L and liquidation risk. It helps prevent market manipulation.
- Liquidation Price & Margin Ratio: The estimated price where your position could be liquidated. Always monitor the Margin Ratio; liquidation is triggered when it falls to 100% or below.
4. Viewing and Managing Open Orders
All your active limit orders, including stop-loss and take-profit orders, can be viewed and managed under ‘Current Orders’ on the main trading page. You can cancel any order from this list.
Executing a Short Position (Selling)
A short position is taken when you believe the asset's price will decrease.
1. Opening a Short (Sell) Order
The process mirrors opening a long position.
On the App:
- Navigate to the BTCUSDT Perpetual trading page as before.
- Configure Margin Mode, Leverage, and choose ‘Limit Order’.
- Enter your Price and Quantity.
- Click ‘Sell/Short’ and confirm.
2. Closing a Short (Buy) Position
To profit from a short position, you must buy back the contract at a lower price.
On the App:
- Trading Page: On the ‘Close’ tab, enter your details and click ‘Buy/Close Short’.
- Positions Page: Select your short position and click ‘Close’, using either a limit or market order.
Again, using Stop-Loss/Take-Profit orders or the ‘Market Close All’ function is advised for efficient position management.
Web Platform Workflow
The process on the web platform is very similar to the app, with a slightly different navigation structure.
Fund Transfer on Web
- Click ‘Asset Management’ in the top-right corner.
- Select ‘Transfer’.
- Choose the currency, transfer from ‘Funding Account’ to ‘Trading Account’, enter the amount, and confirm.
Account Settings on Web
- From the homepage, click ‘Trade’ -> ‘Margin & Contract Trading’.
- Click the settings gear icon -> ‘Trading Settings’ to configure your Account Mode and Trading Unit.
Trading on Web
The steps for opening and closing long and short positions are identical to the app:
- Navigate to ‘Trade’ -> ‘Margin & Contract Trading’.
- Select ‘Perpetual’ -> ‘USDT Contract’ -> your desired pair (e.g., BTCUSDT).
- Choose your margin mode, leverage, order type, price, and quantity to execute trades.
- Monitor and manage all positions and orders from the ‘Positions’ and ‘Orders’ tabs.
Frequently Asked Questions
What is the main difference between coin-margined and USDT-margined contracts?
Coin-margined contracts use the underlying cryptocurrency as collateral, so your profit/loss is in that coin. USDT-margined contracts use USDT for collateral and settlement, allowing you to trade various pairs with one stablecoin and simplifying P&L calculation.
What does leverage do, and what are the risks?
Leverage allows you to open a position much larger than your initial capital. While it magnifies potential profits, it also drastically increases risk. A small adverse price movement can lead to the liquidation of your entire position if proper risk management tools like stop-loss orders are not used.
Should I use cross margin or isolated margin?
Isolated margin limits your risk to the funds allocated to a specific position, protecting the rest of your account balance. Cross margin uses your entire account balance as collateral, which can prevent liquidation on one position but puts your entire portfolio at risk. Isolated is generally safer for beginners.
Why is the mark price used instead of the last traded price?
The mark price, often an average across major exchanges, is used to calculate unrealized P&L and liquidation points. This mechanism prevents unfair liquidations that could be caused by short-term market manipulation or illiquidity on a single exchange.
What happens if my stop-loss order isn’t filled?
In extremely fast-moving or volatile market conditions (a "flash crash" or "squeeze"), there might be a lack of buyers or sellers at your specified stop price. This can result in a "slippage," where the order is filled at a worse price than expected, or in rare cases, not filled at all before liquidation.
How can I avoid liquidation?
The best ways to avoid liquidation are to: 1) Use lower leverage, which gives your position more room to weather price swings. 2) Always set stop-loss orders to automatically close positions at a predetermined loss level. 3) Continuously monitor your margin ratio and add more funds if necessary.