How to play CoinEx currency-margined contract

Currency-margined contracts offer leverage for amplifying gains, but traders must exercise caution by managing risk through strategies like limit leverage, stop-loss orders, and maintaining a healthy margin balance.

Nov 30, 2024 at 02:23 am

Comprehensive Guide to Navigating CoinEx Currency-Margined Contracts: A Step-by-Step Overview

1. Understanding Currency-Margined Contracts

Currency-margined contracts are financial instruments that allow traders to speculate on the price movements of underlying cryptocurrencies without actually owning the underlying asset. The contracts are denominated in a specific cryptocurrency, but the value is tied to another cryptocurrency, hence the name "currency-margined."

Key Features of Currency-Margined Contracts:

• No Physical Delivery: Unlike futures contracts, currency-margined contracts do not involve the physical delivery of the underlying asset. Instead, they settle in the denomination cryptocurrency.
• Leverage: Contracts offer leverage, enabling traders to amplify their positions with borrowed funds. This increases potential profits but also amplifies losses.
• Ticker Symbol: Currency-margined contracts have unique ticker symbols that specify the underlying cryptocurrency and the denomination cryptocurrency. For example, BTC/USDT-PERP represents a contract with Bitcoin (BTC) as the underlying asset and Tether (USDT) as the denomination currency.

2. Opening a Currency-Margined Contract Position

Before You Begin:

• Ensure you have a fully funded CoinEx account.
• Understand the risks involved in margin trading.
• Choose a trading symbol based on your market analysis.

Opening a Long Position:

1. Select the trading symbol and click 'Trade.'
2. Enter the order details: quantity, order type, leverage, and price (optional).
3. Click 'Buy / Long.'
4. Confirm the order details and execute the trade.

Opening a Short Position:

1. Select the trading symbol and click 'Trade.'
2. Enter the order details: quantity, order type, leverage, and price (optional).
3. Click 'Sell / Short.'
4. Confirm the order details and execute the trade.

3. Managing Risk in Currency-Margined Contracts

Key Risk Management Strategies:

• Limit Leverage: Use leverage cautiously and match it to your risk tolerance.
• Set Stop-Loss Orders: Place orders that automatically close positions if the price moves against your favor.
• Position Sizing: Manage the size of your trades relative to your account balance to avoid excessive drawdowns.
• Trailing Stop-Loss: Use dynamic stop orders that adjust according to price movements to lock in profits.
• Hedging: Diversify your portfolio by taking positions on multiple currency-margined contracts.

4. Margin Management in Currency-Margined Contracts

Key Margin Management Concepts:

• Margin: The collateral required to open and maintain positions.
• Initial Margin: The minimum margin required to open a position.
• Maintenance Margin: The minimum margin required to keep a position open.
• Margin Call: A notification when your margin balance falls below the maintenance margin, requiring you to add additional margin or close positions.

Margin Management Steps:

1. Monitor your margin balance and ensure it meets the maintenance margin requirement.
2. Add margin if needed to avoid a margin call.
3. Close positions or reduce leverage if the margin balance remains insufficient.
4. Consider using lower leverage for volatile markets or when opening large positions.

5. Closing Currency-Margined Contract Positions

Closing a Long Position:

1. Select the trading symbol and click 'Trade.'
2. Enter the quantity you wish to close.
3. Select 'Sell / Short' as the order type.
4. Confirm the order details and execute the trade.

Closing a Short Position:

1. Select the trading symbol and click 'Trade.'
2. Enter the quantity you wish to close.
3. Select 'Buy / Long' as the order type.
4. Confirm the order details and execute the trade.

Considerations When Closing Positions:

• If you have multiple positions on the same trading symbol, specify the specific position you want to close.
• Close positions in a timely manner to manage risk and secure profits.
• Monitor market conditions to determine the most favorable closing price.