Can Poloniex contracts be held for a long time?

Perpetual contracts on Poloniex have no expiry date, allowing traders to hold positions indefinitely while considering factors such as funding costs, liquidation risk, and margin requirements.

Nov 28, 2024 at 11:15 am

Can Poloniex Contracts Be Held for a Long Time?

Poloniex is a cryptocurrency exchange that offers a variety of trading options, including perpetual contracts. Perpetual contracts are a type of futures contract that do not have an expiry date, meaning that they can be held for an indefinite period of time. This makes them a popular choice for traders who want to hold positions for longer periods of time.

However, there are some important things to consider before holding Poloniex contracts for a long time:

1. Funding Costs

Perpetual contracts are subject to funding costs, which are paid by traders who hold long positions to traders who hold short positions. These costs are designed to ensure that the price of the contract tracks the underlying asset closely. Funding costs can vary depending on market conditions, but they can be significant over time. As of July 2023, the funding rate on perpetual contracts hold long positions on Poloniex is 0.01%.

2. Risk of Liquidation

Perpetual contracts are also subject to the risk of liquidation. This means that if the price of the underlying asset moves against you, you could lose your entire investment. Always use stop-loss orders to help manage your risk while holding positions. To calculate your liquidation price, divide your entry price by 1 minus the maintenance margin ratio (0.05 for Poloniex perpetual contracts). For example, if Bitcoin is trading at $20,000 and you enter a long position with 10x leverage, your liquidation price would be $19,048.

3. Margin Requirements

To hold perpetual contracts on Poloniex, you will need to maintain a certain amount of margin. The margin requirement varies depending on the contract and the amount of leverage you are using. If your margin falls below the required level, you may be forced to liquidate your position. The minimum margin required hold long positions on the Poloniex perpetual contract marked are as follows:

• BTC: 1%
• ETH: 2%
• XRP: 5%
• USDT: 1%

4. Market Conditions

The market conditions can also affect the profitability of holding perpetual contracts. In a bull market, the price of the underlying asset is likely to rise, which can lead to profits for traders who hold long positions. However, in a bear market, the price of the underlying asset is likely to fall, which can lead to losses for traders who hold long positions.

5. Other Factors

There are a number of other factors that can affect the profitability of holding Poloniex contracts for a long time. These factors include:

• The volatility of the underlying asset
• The trading fees charged by Poloniex
• The liquidity of the contract
• The spread between the bid and ask prices

Conclusion

Holding Poloniex contracts for a long time can be a profitable strategy, but it is important to be aware of the risks involved. These risks can be mitigated by using stop-loss orders, maintaining a sufficient margin balance, and carefully considering the market conditions.