Contract trading, as an important trading method in the cryptocurrency sphere, is favored by investors. It uses leverage to amplify funds, allowing for rapid doubling of returns through buying and selling operations. Contracts are mainly divided into perpetual contracts and delivery contracts. Perpetual contracts have no expiration date, allowing users to hold them long-term and decide when to close; while delivery contracts have specific delivery dates, such as this week, next week, this quarter, next quarter, etc., and the system will automatically execute delivery at expiration, regardless of profit or loss. Additionally, there are two types of margin: USDT margin contracts and coin-margined contracts. The former uses the stablecoin USDT as collateral, allowing for multi-currency trading, and profit and loss settlements are in USDT; the latter uses the underlying cryptocurrency as collateral, requiring the corresponding cryptocurrency to be held before trading, with profit and loss settlements also in that cryptocurrency.
What are the differences between full margin and isolated margin?
The full margin mode means that all positions in the account share the same margin, and profits and losses between different positions can offset each other. In contrast, the isolated margin mode has each position's risks and returns independent, with its margin and profit and loss being calculated separately.
So, what do 'Buy Long' and 'Sell Short' mean?
"Buy Long" refers to buying the contract at an ideal price, and then selling it at a higher price (i.e., closing the position) when the market price rises, thereby profiting from the price difference. This operation is similar to the "buy first, sell later" strategy in spot trading.
"Sell Short" strategy, which means selling the contract at an appropriate price first, and then buying back to close the position when the market price declines, thereby profiting from the price difference. This operation can be abbreviated as "sell first, buy later."
After opening a position, you can view order information under the 'Positions' section and set take profit and stop loss or close positions.
When engaging in contract trading, there are several key points to note:
(1) The margin ratio is an important indicator in contract trading. In single cryptocurrency margin mode or cross cryptocurrency margin mode, when the margin ratio falls below 300%, the system will issue a margin reduction warning to remind you of the risk of reducing positions. If the margin ratio further falls below 100%, the system will automatically cancel orders and trigger forced liquidation according to the rules, so be sure to pay attention to position management to prevent liquidation risks.
(2) In the isolated margin mode, the positions in single cryptocurrency margin mode and cross cryptocurrency margin mode are independent and do not affect each other. This provides you with greater flexibility and risk control capabilities.
(3) The full margin mode is different. In single cryptocurrency margin mode, positions of the same settlement currency share a single margin. In the cross cryptocurrency margin full mode, all assets in the trading account will be converted into USD based on the conversion rate, collectively serving as the position margin. This mode may involve more complex capital management and risk assessment.
(4) Additionally, in the cross cryptocurrency margin mode, even if you do not hold USDT or the underlying cryptocurrency, you can choose to enable the "auto-borrowing" feature to conduct [USDT margin] or [coin-margined] contract trading. This flexibility provides you with more trading options and strategic space.
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