Perpetual Futures Contract Trading Guide By BitKan Crypto Exchange
Keen to earn more with less time spent? Here are some tips and tricks!
Aside from offering Spot Trading, Interval Grid Bot Trading, Infinite Grid Bot Trading, Two-Way Grid Bot Trading, and Rebalancing Bot Trading, BitKan also provides Perpetual Futures Trading.
What Is Perpetual Futures Contract Trading:
Let’s assume that the price of Bitcoin is $60,000. Tom, a crypto derivatives trader, believes that the price will be higher in a month (E.g. $70,000). Hence, he could bet on the possibility by entering into a deal that allows him to buy 1 BTC for $60,000 a month from now. As a result, instead of buying Bitcoin at $70,000 a month from now, Tom is purchasing it at $60,000. All he needs to do is to open a Bitcoin Futures Contract that collectively indicates his commitment to pay $60,000 for 1 Bitcoin next month, regardless of the price at which the digital asset is trading on the spot market.
On the other hand, there is Mary. She believes that the price of Bitcoin will drop below $60,000 at the proposed settlement date. She is committed to selling $60,000 worth of contracts to Tom next month. In other words, Tom is “longing” Bitcoin, whereas Mary is “shorting” the digital asset.
In the event that the price of Bitcoin rose to $65,000 at the expiration date of the contract, Tom would have made a profit of $5,000 since he would be purchasing Bitcoin from Mary at a discount. Assuming that the price of BTC dropped below the $60,000 mark at the settlement date, Tom would have to buy Bitcoin from Mary at a higher price compared to the current market. As a result, Tom would incur a loss. Futures contracts have a limited lifespan and will expire based on their respective calendar cycle. On the flipside, perpetual futures contracts do not have an expiration date. Therefore, traders do not need to keep track of various delivery months. This means that a trader can keep a short position to perpetuity unless he gets liquidated.
How To Launch Futures Trading?
Step 1. Prepare Trading Wallet With Coins
● Find out how to buy cryptocurrency with fiat currency
● Find out how to deposit coins onto BitKan
Step 1A. On BitKan APP, click [Trade] at the bottom right of the APP. Next, click on [Future] on the top right of the APP. This is the page where you select your desired Futures Contract.
Step 1B. Search for BTCUSDT Perpetual Futures Contract
Ensure that you have enabled perpetual futures contract trading. Next, click on the search function on the top left of the screen beside the current futures contract (E.g. BTCUSDT Perp), and enter the keyword “BTC” in the search box. Next, select your desired Futures Contract. In this example, we will be using [BTCUSDT Perp].
Step 1C. Choose Between [Cross] or [Isolated] for Margin Mode
There are two Margin Mode which you can select from: [Cross] or [Isolated]. Begin by clicking on the default Margin Mode [Cross] filter. There will be a brief overview of both Margin Modes. It is advisable to read through the differences and select your preferred Margin Mode. Next, click [Confirm] to proceed.
Step 1C. Adjust To Your Preferred Leverage
Depending on your trading strategy, you may choose to adjust your preferred leverage accordingly. Begin by clicking on the default Leverage [10X] filter. On this page, simply drag to your preferred leverage level and click [Confirm] to proceed with your trading order.
Leverage allows investors to trade with the help of borrowed capital from brokers. Usually, these funds exceed the account balance of investors. Therefore, it is one of the ways to maximise profits by increasing purchasing ability. For BitKan, our trading platform offers all the way up to 125x leverage.
Step 1D. Choose Between [One-Way Mode] or [Hedge Mode] for Position Mode
Begin by clicking on […] on the top right corner. Next, click on [Preferences]. Following after, click on [Margin Mode]. On this page, you may choose between [One-Way Mode] or [Hedge Mode]. In the One-Way Mode, kindly note that one contract can only hold positions in one direction. It is either a long position or a short position. However, in the Hedge Mode, one contract can hold positions in both long and short directions simultaneously. At the same time, it hedges positions in different directions under the same contract.
Step 1E. Check The Fee Rate For Perpetual Futures Contract Trading
Start by clicking on […] on the top right corner. Next, click on [Fee Rate]. On this page, you can check the fee rates for both Spot Trading and Futures Trading. Simply click on [Futures] and you will see the latest futures fee rate. Currently, it is reflected at 0.02% for Maker Fees and 0.04% for Taker fees.
Step 1F. Confirm Order For Perpetual Futures Contract Trading
After selecting your preferred Margin Mode and Leverage, you may proceed to confirm your buy or sell order. If you intend to buy, simply input your limit order, enter the price you would like to buy and click [Buy BTC]. If you intend to sell, the process is similar. Simply input your limit order, enter the price you would like to sell, and click [Sell BTC].
Advantages of Perpetual Futures Contract Trading
The main considerations for futures contract trading are requirements and contract details. Margins are the minimum collateral that traders must have in your account to execute trades. The higher the amount of the trade, the greater the margin amount required by the exchange to execute the trade. The biggest advantage of futures contract trading is that it allows traders to buy (Long) or sell (Short) the market. Hence, this investing strategy gives traders full control of their potential profits as compared to simply holding a digital asset for long-term gains while being at the mercy of the asset’s price movements.
- A Long position is a trade that reflects an assumption or analysis that the price of an asset will go up (increase).
- A Short position is a trade that reflects an assumption or analysis that the price of an asset will go down (decrease).
Furthermore, it is imperative to note that while leverage trading can potentially multiply your gains, it also indicates that any losses taken will be multiplied too.
Congratulations! You have learned more about perpetual futures contract trading, and how to complete your futures contract trade on BitKan!
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