How to operate Bitfinex perpetual contract

Perpetual contracts, with their lack of expiration dates, allow traders to maintain leveraged positions indefinitely, enabling them to speculate on price fluctuations and hedge against risks without the need for physical delivery.

Nov 11, 2024 at 01:19 am

Step 1: Understanding the Basics of Perpetual Contracts

• Perpetual contracts, also known as perpetual futures, are derivative financial instruments that emulate the trading of an underlying asset without an expiry date.
• They mimic the price movements of an underlying asset, such as a cryptocurrency, without requiring physical delivery of the asset.
• Perpetual contracts allow traders to speculate on price fluctuations and hedge against risk, as they resettle to the spot price of the underlying asset.

Step 2: Choosing the Right Trading Pair

• Bitfinex offers a wide range of perpetual contracts to trade, each based on different underlying assets like BTC, ETH, and USD.
• The choice of trading pair will determine the asset you are trading against, such as BTC/USD or ETH/USDT.
• Consider market liquidity, trading fees, and market volatility when selecting the most suitable trading pair for your needs.

Step 3: Setting Up a Bitfinex Account

• Create a Bitfinex account and complete the KYC (Know Your Customer) verification process to enable trading.
• Fund your account by depositing cryptocurrency or fiat currency through the available methods.
• Ensure sufficient funds in your account to cover the initial margin and potential losses.

Step 4: Configuring Trading Parameters

• Choose the "Perpetual Contracts" section from the main menu.
• Select the desired trading pair and adjust the trading parameters, such as position size, leverage, and order type.
• Determine the leverage multiplier carefully, as it can amplify both potential profits and losses.
• Consider placing limit orders to prevent slippage and unfavorable execution prices.

Step 5: Monitoring Positions and Managing Risk

• Keep track of open positions and their associated risks by using the position management tools on the platform.
• Monitor price fluctuations and adjust positions as needed to manage risk and maximize profits.
• Utilize stop-loss and take-profit orders to automate position closing based on predefined price levels.

Step 6: Funding and Fees

• Understand that perpet