How to play perpetual contract with AscendEX

Navigating perpetual contracts on AscendEX entails understanding the concept, carefully managing leverage, and adhering to sound risk management principles to maximize trading outcomes.

Nov 28, 2024 at 11:06 am

Comprehensive Guide to Navigating Perpetual Contracts on AscendEX

Introduction

Perpetual contracts, also known as perpetual futures, have emerged as innovative financial instruments in the realm of cryptocurrency trading. AscendEX, a leading digital asset exchange, offers a sophisticated platform for traders to engage in perpetual contract trading. This guide provides a comprehensive overview of how to effectively navigate perpetual contracts on AscendEX.

Understanding Perpetual Contracts

1. Definition: Perpetual contracts are derivative instruments that simulate the price movements of an underlying asset, such as Bitcoin, without having an expiration date. They allow traders to take positions and speculate on future price fluctuations.
2. Leverage: Perpetual contracts provide leverage, enabling traders to magnify their potential gains or losses by using borrowed funds. However, it's crucial to manage leverage carefully, as it can amplify both profits and risks.
3. Funding Rate: Perpetual contracts employ a funding rate mechanism to balance long and short positions. This rate is adjusted periodically and is paid by one party to the other, depending on the market's positioning.

Getting Started with AscendEX

1. Account Creation: To participate in perpetual contract trading on AscendEX, you must first create an account and complete the KYC verification process.
2. Funding Your Account: Deposit funds into your AscendEX account using supported methods like credit/debit cards, wire transfers, or cryptocurrencies.
3. Trading Interface: Navigate to the "Futures" tab on the AscendEX platform to access the perpetual contract trading interface. Choose the desired contract (e.g., BTC/USDT) and select your preferred leverage level.

Trading Perpetual Contracts

1. Placing Orders: Use the order form to specify the contract amount, price, and order type (market, limit, or stop-limit). Market orders execute immediately at the current market price, while limit orders are triggered when the price reaches the specified level.
2. Monitoring Positions: Track your open positions and their performance in the "Positions" section. Adjust your position size or strategy as needed.
3. Managing Risk: Implement appropriate risk management strategies, such as stop-loss orders or trailing stop orders, to mitigate potential losses.

Funding and Settlement

1. Funding: Calculate and pay the funding rate when it becomes due. AscendEX automatically handles funding settlements, which can be either positive or negative.
2. Settlement: Perpetual contracts do not expire, but they can be closed at any time by placing an opposite position. The resulting gain or loss is settled in the quoted currency (e.g., USDT for BTC/USDT contracts).

Tips for Success

1. Research and Education: Understand the risks and mechanics of perpetual contract trading before engaging in real trading.
2. Practice Risk Management: Leverage can magnify both profits and losses, so manage your risk exposure wisely.
3. Monitor the Market: Stay up-to-date on cryptocurrency news and market dynamics that can impact perpetual contract prices.
4. Use Stop-Loss Orders: Protect your capital by setting stop-loss orders to limit potential losses.
5. Use Leverage Prudently: While leverage can enhance your profits, it also increases your risk. Use it cautiously and according to your risk tolerance.