Crypto.com Contract Trading Tutorial

With Crypto.com's user-friendly platform, individuals can access contract trading, a method of speculating on future asset prices using leverage, shorting, and hedging strategies.

Nov 25, 2024 at 10:49 am

Crypto.com Contract Trading Tutorial

Introduction

Contract trading, also known as futures trading, is a method of trading cryptocurrencies by speculating on the future price of an asset. By entering into a contract, traders can profit from the price fluctuations of an underlying asset without actually owning it. Crypto.com is a popular cryptocurrency exchange that offers a user-friendly platform for contract trading.

Benefits of Contract Trading

• Leverage: Contract trading allows you to use leverage to increase your potential profits. However, it is crucial to note that leverage also increases your risk of losses.
• Shorting: Traders can speculate on the price decrease of an asset by entering into a short contract.
• Hedging: Contract trading can be used to hedge against the risk of price fluctuations in the underlying asset.

Understanding Contract Trading

• Contract Size: The contract size determines the amount of underlying asset that each contract represents.
• Leverage: The leverage ratio is the ratio between the trader's initial margin and the total contract value.
• Margin: The margin is the collateral that traders must maintain to cover potential losses.
• Long Position: A trader takes a long position when they believe the price of the asset will rise.
• Short Position: A trader takes a short position when they believe the price of the asset will fall.

Step-by-Step Guide to Contract Trading on Crypto.com

Step 1: Create a Crypto.com Account

To start contract trading, you need to create an account on Crypto.com. You can register for an account on their website or mobile app.

Step 2: Fund Your Account

You need to deposit funds into your Crypto.com account to start trading. You can fund your account using various methods such as bank transfer, credit card, or cryptocurrency deposit.

Step 3: Choose a Trading Pair

Select the trading pair you want to trade from the list of available pairs on the Crypto.com platform. Each trading pair represents the underlying asset and the quote currency.

Step 4: Select Contract Type

Crypto.com offers two types of contracts:

• Linear Contracts: These contracts are cash-settled and do not require physical delivery of the underlying asset.
• Perpetual Contracts: These contracts have no expiration date and are settled in the underlying asset.

Step 5: Enter Contract Details

Specify the following details when entering into a contract:

• Contract Size: Determine the number of contracts you want to buy or sell.
• Leverage: Select the leverage ratio you want to apply to the contract.
• Price: Enter the price at which you want to enter into the contract.
• Order Type: Choose between a limit order or a market order.

Step 6: Monitor Your Position

Once you have entered into a contract, you can monitor its performance in real-time on the Crypto.com trading platform. You can modify or close your position as per your trading strategy.

Step 7: Close Your Position

To close your contract, you need to enter an opposite contract. For example, if you entered into a long position, you would need to enter into a short position to close the contract.

Step 8: Withdraw Funds

After closing your position and realizing your profit or loss, you can withdraw funds back to your bank account or other preferred methods.

Top Five Alternative Crypto Exchanges for Contract Trading

Binance

• Pros: Extensive trading pairs, high liquidity, advanced charting tools
• Cons: High trading fees, withdrawal limits, potential regulatory issues

Bybit

• Pros: Low trading fees, intuitive interface, perpetual contracts
• Cons: Limited trading pairs, fewer order types

OKX

• Pros: Wide range of trading options, high leverage, futures with insured funds
• Cons: Complex fee structure, potential regulatory concerns

Huobi

• Pros: Diverse trading instruments, user-friendly platform, spot and margin trading
• Cons: Less liquidity in some markets, customer support issues

Gate.io

• Pros: Competitive trading fees, multiple trading options, spot and futures trading
• Cons: Limited trading pairs, withdrawal fees for some cryptocurrencies