Tutorial for Beginners on Cryptocurrency Perpetual Contract Position Covering Techniques

Tips for covering positions in perpetual contracts: Cover positions when the losses are small and the market trend is unclear. The margin amount is calculated based on the loss, margin rate and leverage. Cover positions in batches and set stop loss orders to limit losses. Make additional margin calls promptly after the position is covered, and remember that the higher the leverage, the greater the risk.

Tutorial on margin covering techniques for currency circle perpetual contracts for beginners

What is margin covering

Perpetual contracts are a type of derivative that allow traders to speculate on the future movement of digital asset prices. Cover-up refers to the trading strategy of reducing the loss ratio by adding margin when a position is losing money.

When to cover positions

Generally speaking, it is recommended to cover positions when the loss is small and the market trend is not yet clear. It should be noted that covering a position too early may amplify losses, while covering a position too late may lead to a liquidation.

Tips for covering positions

1. Evaluate the market trend:

Before covering a position, you should first evaluate the market trend. If the market is in a downward trend, covering a position will increase the risk of loss; if the market is in an upward trend, covering a position may bring profits.

2. Calculate the margin amount:

The margin amount should be calculated based on the current position loss, margin rate and leverage multiple. The formula is: Cover-up amount = (Maintenance margin rate - Current margin rate) Position size Leverage multiple

3. Cover-up in batches:

Recommendation Cover positions in batches, do not add the entire margin at once. This can reduce risks and adjust the replenishment strategy according to market changes.

4. Stop loss setting:

While covering positions, stop loss orders should be set to limit losses. The stop-loss price of a stop-loss order should be determined based on market trends and your own risk tolerance.

5. Margin call

After the margin call is completed, you need to add margin in time. Insufficient margin may result in liquidation.

Notes

• Covering positions is not a foolproof strategy and should be operated with caution.
• The higher the leverage, the greater the risk of covering the position.
• When the market fluctuates violently, you need to be more cautious when covering positions.
• The consequences of liquidation are serious and risks should be strictly controlled.

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