Contract trading involves buying or selling agreements for an asset at a predetermined price and quantity on a future date. This method allows traders to profit from both rising and falling markets. Two primary types exist: perpetual contracts and delivery contracts. Investors can open long positions to benefit from price increases or short positions to gain from price declines.
Understanding Contract Trading Basics
What Are Perpetual Contracts?
Perpetual contracts lack an expiration date, enabling traders to hold positions indefinitely. Users manually close these positions when desired.
What Are Delivery Contracts?
Delivery contracts have fixed settlement dates—weekly, bi-weekly, quarterly, or bi-quarterly. The system automatically closes all positions at expiration, regardless of profit or loss.
Margin Types Explained
- USDT-Margined Contracts: Use the stablecoin USDT as collateral. Traders only need USDT to open positions across various cryptocurrencies, with profits and losses settled in USDT.
- Coin-Margined Contracts: Require holding the underlying cryptocurrency (e.g., BTC) as collateral. Profits and losses are settled in the same coin.
Isolated vs. Cross Margin
- Isolated Margin: Allocates separate collateral to each position, isolating risks and profits.
- Cross Margin: Shares collateral across all positions, allowing profits and losses to offset each other.
Mobile App Contract Trading Guide
Step 1: Transfer Funds
- Navigate to the Trade section.
- Click Transfer.
- Select the currency and move assets from Funding Account to Trading Account.
Enter the amount and confirm.
- Use USDT for USDT-margined contracts.
- Use the specific coin (e.g., BTC) for coin-margined contracts.
Step 2: Select Contract and Pair
- Tap the currency pair at the top-left.
- Search for your desired cryptocurrency.
- Choose the contract type (perpetual/delivery) and margin type (USDT/coin).
Step 3: Set Margin Mode
Select Isolated or Cross Margin based on your risk management strategy.
Step 4: Open a Position
- Buy/Long: Profit from price increases by buying low and selling high.
- Sell/Short: Profit from price declines by selling high and buying low.
After opening a position, monitor it in the Positions tab. Set stop-loss/ take-profit orders or close manually.
Web Platform Contract Trading
Step 1: Access Trading Interface
- Log in and click Trade.
- Select Leveraged Contract Trading.
Step 2: Fund Your Account
Transfer assets from Funding Account to Trading Account, specify the amount, and confirm.
Step 3: Choose Contract and Pair
Select the contract type and search for your preferred cryptocurrency pair.
Step 4: Execute Trade
Pick Isolated or Cross Margin, enter order details, and open a Long or Short position.
Track active trades in the Positions section. Close positions manually when targets are met.
Risk Management Tips
- Maintenance Margin Ratio: If this falls ≤300%, the system issues a margin call. At ≤100%, liquidation occurs.
- Isolated Margin: Positions in single-currency and cross-currency modes operate independently.
- Cross Margin: In single-currency mode, shared collateral pools by settlement currency; in cross-currency mode, all assets convert to USD as unified collateral.
- Auto-Borrow: Enables trading without holding USDT or underlying coins in cross-currency margin mode.
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Frequently Asked Questions
What is the difference between perpetual and delivery contracts?
Perpetual contracts have no expiry and require manual closure. Delivery contracts auto-settle at predetermined dates.
Can I trade without holding the underlying asset?
Yes, using USDT-margined contracts or enabling auto-borrow in cross-currency margin mode allows this.
How does liquidation work?
If maintenance margin ratio hits 100%, the system forcibly closes positions to prevent further losses.
Which margin mode is safer for beginners?
Isolated margin limits risk to per-position collateral, making it preferable for newcomers.
What happens during a margin call?
At a 300% maintenance margin ratio, reduce exposure or add funds to avoid liquidation.
Can I switch margin modes after opening a position?
No, adjust modes only before entering trades or after closing existing positions.