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Bybit currency-based contract tutorial

In Bybit's currency-based contracts, traders speculate on crypto price movements against a stablecoin, with positions settling in the quoted currency (USDT or BUSD), ensuring enhanced liquidity and reduced volatility.

Nov 19, 2024 at 02:48 pm

Bybit Currency-Based Contract Tutorial

Step 1: Understanding Currency-Based Contracts

Currency-based contracts, also known as inverse perpetual contracts, are derivative instruments that allow traders to speculate on the price movements of cryptocurrencies against a stablecoin, typically USDT or BUSD.
Unlike traditional futures contracts, which settle in the underlying asset, currency-based contracts settle in the quoted currency, providing increased liquidity and reduced volatility.
Traders can take long or short positions on these contracts, betting on whether the price of the cryptocurrency will rise or fall against the stablecoin.

Step 2: Choosing a Currency-Based Contract

Bybit offers a wide range of currency-based contracts, each based on a different cryptocurrency pair.
Popular pairs include BTC/USDT, ETH/USDT, and LINK/USDT.
Traders should consider the volatility and liquidity of each pair before selecting a contract.

Step 3: Funding Your Account

To trade currency-based contracts on Bybit, traders must first fund their accounts.
Bybit supports various funding methods, including cryptocurrencies, credit/debit cards, and bank transfers.
Once funds are deposited, traders can transfer them to their trading account.

Step 4: Opening a Position

To open a long position, traders need to buy the contract.
To open a short position, traders need to sell the contract.
The position size represents the number of contracts traded and determines the potential profit or loss.

Step 5: Managing Risk with Leverage and Stop-loss

Bybit offers leverage of up to 100x on currency-based contracts, which can amplify both profits and losses.
It is crucial to use leverage wisely and set appropriate stop-loss orders to manage risk.
Stop-loss orders automatically close positions when the price reaches a predetermined level, preventing excessive losses.

Step 6: Monitoring and Settling Positions

Traders can monitor their open positions in the "Positions" section of the Bybit interface.
Positions can be closed manually or through take-profit or stop-loss orders.
Upon closing a position, gains or losses are settled in the quoted currency.

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