What does perpetual contract mean? How to trade perpetual contract? How to play?

Perpetual contracts are a type of derivative that allow traders to speculate on price changes in an underlying asset, such as a cryptocurrency, without actually holding the asset. Unlike futures contracts, perpetual contracts have no expiration date, allowing traders to hold or sell the contract indefinitely. For beginners, trading perpetual contracts involves seven steps: choosing a trading platform, opening an account, funding the account, selecting the underlying asset, opening a position, managing risk and closing the position. During the trading process, it is crucial to understand the risks and rewards of perpetual contracts, and to start with small trades and gradually increase the size as you gain experience.

Perpetual Contract: Definition and Trading Guide

1. What is a Perpetual Contract?

A perpetual contract is a derivatives contract that allows traders to speculate on the price movements of an underlying asset, such as a cryptocurrency, without actually owning the asset. Unlike traditional futures contracts, perpetual contracts have no expiration date, so traders can hold or sell the contract indefinitely.

2. Perpetual Contract Trading Guide

For novices, perpetual contract trading can follow the following steps:

1. Choose a trading platform:

First, choose a regulated and reputable perpetual contract trading platform. Compare different platforms to understand their fees, leverage levels and available underlying assets.

2. Open an account:

Register an account on the chosen platform. Provide necessary personal information and verify identity.

3. Fund your account:

Deposit funds into your account to start trading. Different platforms support different payment methods.

4. Select the underlying asset:

Select the underlying asset you are interested in, such as Bitcoin or Ethereum. Each asset has different leverage levels and fees.

5. Open a position:

Choose to buy or sell a contract. A contract is bought if the price of the underlying asset is expected to rise. If the price is expected to fall, the contract is sold.

6. Manage risk:

Perpetual contract trading involves leverage, which means you can borrow funds to trade. Use leverage with caution, as excessive leverage can magnify gains and losses. Set up stop-loss and take-profit orders to limit potential losses.

7. Close a position:

When you want to exit a trade, close the position by buying or selling the opposite position. This will close your position and settle the profit or loss.

Tip:

• Before you start trading, thoroughly understand the risks and rewards of perpetual contracts.
• Start with small transactions and gradually increase the size as you gain experience.
• Stay disciplined and follow your trading plan.
• Don’t trade emotionally.

The above is the detailed content of What does perpetual contract mean? How to trade perpetual contract? How to play?. For more information, please follow other related articles on the PHP Chinese website!