How to play Upbit perpetual contracts

Upbit's perpetual contracts offer leveraged trading with no expiration, enabling traders to speculate on cryptocurrency prices indefinitely.

Nov 25, 2024 at 01:41 am

Understanding Upbit Perpetual Contracts

1. What are Upbit Perpetual Contracts?

Upbit perpetual contracts are financial instruments that enable traders to speculate on the future price of a cryptocurrency asset without owning the underlying asset. These contracts are standardized agreements that settle on a specific date in the future or remain open with no set expiry date.

2. Features of Upbit Perpetual Contracts:

• Leverage: Traders can use leverage to amplify their potential gains or losses. Leverage allows them to trade with a larger amount than their account balance but carries the risk of increased potential for losses.
• No Expiration: Unlike traditional futures contracts, perpetual contracts have no set expiration date, allowing traders to hold positions indefinitely or until they manually close them.
• Trading Fee: Upbit charges trading fees based on the maker and taker model. Makers add liquidity to the order book and are rewarded with a rebate, while takers match existing orders and pay a trading fee.

Trading Upbit Perpetual Contracts

1. Create an Upbit Account:

Before you can trade perpetual contracts, you need to create an Upbit account. The registration process involves providing personal information and verifying your identity.

2. Choose a Contract:

Upbit offers perpetual contracts on a range of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). Select the contract that corresponds to the asset you wish to speculate on.

3. Manage Margin:

To open a perpetual contract position, you need to maintain a sufficient amount of margin in your account. Margin acts as collateral and protects the exchange against potential losses on your trade. The margin requirement varies based on the contract and the leverage used.

4. Place an Order:

Upbit allows you to place market, limit, or stop-limit orders for perpetual contracts. Market orders execute at the current market price, while limit orders specify a desired price at which you want to execute your trade. Stop-limit orders combine a stop price with a limit price to automatically execute a trade when a specified price is reached.

5. Monitor and Adjust Risk:

Monitor the performance of your perpetual contract position and adjust your risk management strategy accordingly. Use stop-loss orders to automatically close your position if the price moves against you.

6. Close the Position:

When you are ready to exit your perpetual contract position, you can close it by executing an opposite order. For example, if you previously opened a long position, you would close it by placing a short position of the same size. The profit or loss from the closed position will be credited or debited from your account.

7. Withdrawal of Funds:

Once you have closed all of your perpetual contract positions, you can withdraw your funds from Upbit to your crypto wallet or bank account.