BitMart Contract Trading Tutorial

With BitMart's comprehensive contract trading platform, beginners can explore the exciting world of futures trading, utilizing financial instruments to speculate on asset price movements without actual ownership.

Nov 25, 2024 at 04:36 pm

BitMart Contract Trading: A Comprehensive Guide for Beginners

Introduction

Contract trading involves utilizing financial instruments that offer exposure to the price movements of underlying assets without physically owning the assets themselves. The following guide will provide a detailed overview of BitMart contract trading, empowering you with the knowledge and insights to navigate this dynamic trading environment.

1. Understanding Contract Trading Concepts

• What are Futures Contracts? Futures contracts are standardized agreements to buy or sell an underlying asset at a predetermined price on a specific future date. Unlike traditional spot trading, where immediate ownership and delivery occur, futures trading involves speculating on future price movements without actual asset ownership.
• Types of Futures Contracts: BitMart offers various futures contracts, including perpetual contracts, which have no fixed expiration date, and quarterly contracts, which expire on specific dates. Each contract type has distinct characteristics and trading conditions.
• Leverage and Margin: Contract trading allows for leverage, which amplifies potential profits and losses. Margin refers to the collateral required to open and maintain leveraged positions. Understanding leverage and margin management is crucial to mitigating trading risks.

2. Creating a BitMart Account and Funding

• Account Registration: Register for a BitMart account by completing the KYC verification process to enable contract trading functionality.
• Depositing Funds: Transfer funds to your BitMart wallet to fund your contract trading activities. BitMart supports deposits in various cryptocurrencies, including stablecoins like USDT.
• Choosing a Trading Pair: Select the desired contract trading pair, which represents the underlying asset you wish to speculate on. BitMart offers a wide range of trading pairs, including BTC/USDT, ETH/USDT, and LINK/USDT.

3. Placing an Order on BitMart

• Order Types: BitMart supports various order types, including limit orders, market orders, and stop orders. Limit orders allow you to specify the desired price for a trade execution, while market orders execute at the best available market price.
• Order Parameters: When placing an order, specify the contract quantity, price (for limit orders), and leverage. Leverage choices vary depending on the trading pair and market conditions.
• Execution: Orders are processed and executed based on the chosen order type and specified parameters. Executed orders are reflected in the "Positions" section of your account.

4. Monitoring and Managing Positions

• Position Management: Once a position is opened, it can be monitored and managed through the "Positions" tab. This tab displays the current price, unrealized profit/loss, and other relevant information about open positions.
• Risk Management: Effective risk management is crucial in contract trading. Utilize stop-loss and take-profit orders to limit potential losses and secure profits. Monitor your margin level and adjust positions accordingly to avoid liquidations.
• Closing Positions: To close a position, place an opposing order with the same contract quantity. For example, if you have a long position, you would place a sell order to close the position.

5. Understanding Profit and Loss

• Profit and Loss Calculation: Contract trading profit is realized when the settlement price exceeds the entry price for long positions and vice versa for short positions. Unrealized profit/loss represents the potential profit or loss calculated based on the current market price.
• Fees and Commissions: BitMart charges trading fees and funding fees. Trading fees are a percentage of the trade value, while funding fees are paid periodically to adjust positions according to market conditions. Understanding these fees is essential for accurate profit/loss calculations.
• Settlement: Contracts are settled at the expiration date for quarterly contracts or the time of closing the position for perpetual contracts. Settlement prices determine the final profit/loss for each position.