How to open a futures account on Poloniex

Opening a futures account on Poloniex requires creating a regular account, enabling futures trading, funding a futures wallet, creating a margin account, selecting a futures contract, and placing an order while understanding the associated risks.

Nov 27, 2024 at 07:08 pm

How to Open a Futures Account on Poloniex

Introduction

Poloniex, one of the oldest and most reputable cryptocurrency exchanges, offers a robust futures trading platform for experienced traders seeking leveraged exposure to the cryptocurrency market. Opening a futures account on Poloniex is a straightforward process, but it's crucial to understand the risks involved before proceeding.

Steps to Open a Poloniex Futures Account

1. Create a Poloniex Account

If you don't have a Poloniex account, navigate to the Poloniex website (https://poloniex.com/) and click "Sign Up" in the top right corner. Follow the instructions to create an account, providing your email address, creating a password, and completing the KYC (Know Your Customer) verification process.

2. Enable Futures Trading

Once your account is created, hover over your username in the top right corner and select "Settings." Under the "Trading" tab, locate the "Enable Futures Trading" option and click "Enable." You will need to pass a brief quiz to demonstrate your understanding of futures trading before enabling futures trading on your account.

3. Fund Your Futures Wallet

To trade futures, you need to transfer funds from your Poloniex spot wallet to your futures wallet. Click on the "Balances" link in the top menu bar, and then select "Transfer" from the dropdown menu. Enter the currency you want to transfer (e.g., USDT), the amount you wish to move, and choose "Futures" as the destination wallet.

4. Create a Futures Margin Account

A margin account is required to trade futures on Poloniex. Click on the "Futures" tab in the top menu bar and select "Margin Account." Click on the "Create Margin Account" button and select the currency you want to use as margin (e.g., USDT). You will need to maintain a minimum margin balance to cover potential losses.

5. Choose a Futures Contract

Poloniex offers a wide range of futures contracts, including perpetual contracts and quarterly futures. Perpetual contracts have no fixed expiry date, while quarterly futures expire every three months. Click on the "Futures" tab in the top menu bar and choose the contract you want to trade.

6. Place a Futures Order

Once you have selected a contract, click on the "Buy" or "Sell" button on the order form. Specify the order type, such as limit, market, or stop order, and enter the desired quantity and trading parameters. Double-check your order before submitting it.

Risks of Futures Trading

Futures trading involves significant risk, including:

• Leverage: Futures trading allows you to use leverage, potentially amplifying your profits but also your losses.
• Margin Calls: If your margin balance falls below the required level, you may receive a margin call, which requires you to deposit additional funds or face liquidation of your position.
• Liquidation: If the market moves against you and you fail to meet margin calls, your positions will be automatically liquidated, resulting in substantial losses.
• Market Volatility: The cryptocurrency market is highly volatile, and futures trading magnifies this volatility.
• Regulatory Risks: Futures trading may be subject to regulations in certain jurisdictions, which can affect the availability and trading conditions of futures products.

Tips for Futures Trading

• Educate Yourself: Thoroughly understand futures trading concepts, including leverage, margin requirements, and liquidation risks.
• Practice: Use the Poloniex paper trading mode to practice futures trading before risking real funds.
• Start Small: Initially, trade with small amounts of capital to manage your risk exposure.
• Monitor Your Positions: Regularly check your open positions and adjust leverage and margin as needed.
• Set Stop-Loss Orders: Use stop-loss orders to limit potential losses in adverse market conditions.