Poloniex Perpetual Contract Tutorial Example

Poloniex's perpetual contracts, dubbed perpetual swaps, allow traders to speculate on underlying assets without delivery, showcasing key differences from futures contracts like no expiration date and funding rate adjustments to align with spot prices.

Nov 26, 2024 at 08:22 am

Poloniex Perpetual Contract Tutorial Example: A Comprehensive Guide

Perpetual contracts, also known as inverse futures or perpetual swaps, are a popular trading instrument that allows traders to speculate on the price of an underlying asset without the need for physical delivery. They are similar to futures contracts, but with key differences such as the absence of an expiration date and the use of a funding rate to keep the contract price in line with the spot market.

Poloniex, a leading cryptocurrency exchange, offers perpetual contracts on a wide range of assets, including Bitcoin, Ethereum, and other altcoins. In this tutorial, we will provide a step-by-step guide on how to trade perpetual contracts on Poloniex, using BTC-USD as an example.

Step 1: Create a Poloniex Account

To start trading perpetual contracts on Poloniex, you will need to create an account on the exchange. The registration process is straightforward and requires only a few pieces of personal information. Once you have created an account, you will need to verify your email address and identity before you can start trading.

Step 2: Fund Your Account

Before you can start trading, you will need to fund your Poloniex account with either cryptocurrency or fiat currency. Poloniex supports a variety of deposit methods, including bank transfer, credit card, and cryptocurrency. Once you have funded your account, you will need to transfer your funds to your trading account.

Step 3: Choose a Trading Pair

The first step in trading perpetual contracts is to choose a trading pair. Poloniex offers a wide range of perpetual contracts, including BTC-USD, ETH-USD, and many others. Each trading pair represents the underlying asset that you are trading against. For example, BTC-USD represents the price of Bitcoin in US dollars.

Step 4: Place Your Order

Once you have chosen a trading pair, you can place your order. Poloniex offers a variety of order types, including market orders, limit orders, and stop orders. Market orders are executed immediately at the current market price, while limit orders are executed only when the price reaches a specified level. Stop orders are used to trigger a trade when the price reaches a certain level.

Step 5: Manage Your Risk

Perpetual contracts are a leveraged product, which means that you can trade with more capital than you have in your account. This can magnify your profits, but it can also increase your risk of losses. It is important to manage your risk carefully by using stop-loss orders and position sizing.

Step 6: Withdraw Your Funds

Once you have finished trading, you can withdraw your funds from Poloniex. Poloniex supports a variety of withdrawal methods, including bank transfer, credit card, and cryptocurrency. The withdrawal process is typically processed within 24 hours.

Step 7: Demo Account

Poloniex also offers a demo account which allows you to practice trading perpetual contracts without risking any real money. This is a great way to learn how to trade perpetual contracts before you start trading with real money.

Step 8: Fees

Poloniex charges a variety of fees for trading perpetual contracts, including trading fees, funding fees, and withdrawal fees. The trading fees are typically 0.05% of the trade value, while the funding fees vary depending on the market conditions. The withdrawal fees depend on the withdrawal method used.