What is rolling over? A must-read for contract traders! Even beginners can understand it in seconds! 💰 A must-read in the crypto world｜What the hell is "rolling over"? A self-rescue guide for contract traders!
#Bitcoin #ContractTrading #Cryptocurrency #UsefulInfo
🔍 What is rolling over in the crypto world?
In a nutshell: Close position → Change position → Extend life!
In the crypto world, rolling over is common among *leveraged contract traders*, especially those playing with futures/perpetual contracts.
💥 The 3 main scenarios of rolling over in the crypto world
1️⃣ Contract expiration without wanting to deliver
👉 There are two types of futures in the crypto world: *perpetual contracts* (no expiration date) and *quarterly contracts* (expire in 3 months).
If you hold a quarterly contract (like a June BTC contract), close the position when it’s nearing expiration and switch to a September contract to continue "holding the position"!
❗️ Note: Although perpetual contracts don’t require rolling over, you have to pay a “funding rate” (mutual liquidation between long and short)!
2️⃣ **Leveraged position about to be liquidated, forced to extend life
👉 Using 10x leverage to go long on BTC, price plummets to the liquidation line?
🔥 Emergency operation: Close half of the position → Use remaining margin to reopen the position → Reduce leverage to survive!
(This is commonly known as the “death deferment tactic,” but you may incur more losses as you roll over…)
3️⃣ Daily operations of arbitrage traders
👉 For example, simultaneously shorting a BTC quarterly contract (high price) from one exchange, and going long on a perpetual contract (low price) from another, rolling over to lock in price difference profits upon expiration～
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⚠️ Hidden risks of rolling over in the crypto world **
❌ Funding rate backlash: Rolling over perpetual contracts to a new platform may get you harvested by high funding rates!
(Example: Certain platform’s funding rate is 0.1%, rolling over once = giving away transaction fees for free)
❌ Spike attackers: Encountering extreme market conditions while rolling over, both old and new positions can be liquidated!
❌ Gas wars: On-chain contract rolling over (like ETH options) may drain your wallet due to miner fees!
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🌰 A real case from the crypto world
Scenario: You use 100x leverage to go long on ETH, with a capital of 10,000 USDT
▫️ ETH price plummets by 10%, margin left is only 1,000 USDT, just 1% away from liquidation!
🔥 Rolling over operation:
1️⃣ Close 90% of the position (leave 100 USDT)
2️⃣ Use 100 USDT to reopen a long position with 10x leverage
▫️ Result: Position shrinks but leverage decreases, allowing you to withstand volatility → Waiting for a rebound!
(But if it continues to drop, 100 USDT will still go to zero…)
