Currency Contract Trading Tutorial

Contract buying and selling are financial derivatives that allow traders to trade cryptocurrency futures contracts without holding the underlying asset. There are two main types of contract trading: perpetual contracts and term contracts. The trading process involves selecting an exchange, opening an account, depositing funds, selecting contract types, setting leverage, placing orders, managing positions and settling contracts. Contract trading involves risks such as leverage, volatility, and liquidation. Traders should exercise caution and understand the relevant risks.

Coin Circle Contract Trading Tutorial

What is contract trading?

Contract buying and selling is a type of financial derivative that allows traders to buy and sell without holding the underlying asset. In the currency circle, contract trading refers to the buying and selling of cryptocurrency futures contracts on exchanges, where futures contracts represent the right to buy or sell a specific cryptocurrency at a certain point in the future.

Types of Contract Trading

In the currency circle, there are two main types of contract trading:

• Perpetual Contract: There is no expiration date, and traders can hold the contract indefinitely.
• Term contract: has a clear expiration date, and the contract will be automatically settled when it expires.

The process of contract buying and selling

The process of contract buying and selling usually includes the following steps:

1. Select an exchange: Choose a reputable exchange that supports contract buying and selling.
2. Account opening: Register on the exchange and complete the KYC process.
3. Deposit: Deposit funds into your trading account.
4. Select the contract type: Select the cryptocurrency futures contract type you want to trade.
5. Set Leverage: Set trading leverage (enlarge the transaction amount).
6. Place an order: Select the buying and selling direction (long or short) and the transaction quantity.
7. Manage positions: Monitor trading profits and losses and risks, and adjust positions as needed.
8. Settlement Contract: At expiration, the fixed-term contract will be automatically settled, and the profit and loss will be reflected in the trading account. With perpetual contracts, traders can close their positions at any time to realize profits and losses.

Risks of contract trading

Contract trading is a high-risk financial activity. Traders should fully understand the following risks before participating:

• Leverage risk: Leverage magnifies the transaction amount, which can not only magnify profits but also Can magnify losses.
• Volatility Risk: Cryptocurrency prices fluctuate greatly, which can result in potentially large losses.
• Liquidation risk: If the position loss exceeds the margin, the exchange may automatically liquidate the position, resulting in a loss of all principal.

Conclusion

Contract buying and selling is a financial instrument used to trade cryptocurrency futures contracts. It allows traders to speculate on cryptocurrency prices without holding the underlying asset. However, contract buying and selling also comes with significant risks, and traders should exercise caution and fully understand the potential risks.

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