How to operate Poloniex contract trading

To trade contracts on Poloniex, users must create an account, transfer funds to their margin account, and select a trading pair before placing an order.

Nov 28, 2024 at 06:26 pm

How to Operate Poloniex Contract Trading

Step 1: Understanding Contract Trading

Contract trading involves speculating on the future price of an underlying asset, such as a cryptocurrency, without actually owning it. Traders use contracts to leverage their positions, potentially magnifying both profits and losses. Margin trading, a common form of contract trading, allows traders to borrow funds to increase their trading capital.

Step 2: Opening an Account

To trade contracts on Poloniex, users must create an account. The registration process requires providing personal information, including name, email, and phone number. After verification, users can fund their accounts using various methods, such as cryptocurrencies or fiat currencies.

Step 3: Transferring Funds to Margin Account

To participate in contract trading, users must transfer funds to their margin account. This separate account holds the funds used for margin trading. Users can choose between different margin modes, such as isolated margin or cross margin, each with its own risk profile.

Step 4: Selecting a Trading Pair

Poloniex offers a wide range of trading pairs, including cryptocurrencies against USDT, BTC, or other altcoins. Users need to select the desired trading pair based on their market analysis and trading strategy.

Step 5: Placing an Order

When placing a contract trade, users specify the order type, such as limit order or market order, the price, and the number of contracts. Limit orders allow traders to set a specific price at which the trade will execute, while market orders execute immediately at the current market price.

Step 6: Managing Positions

After placing an order, users can monitor their open positions from the trading interface. Positions can be adjusted or closed at any time to realize profits or minimize losses. Poloniex provides risk management tools, such as stop-loss and take-profit orders, to help traders control their downside risk.

Step 7: Funding and Auto-Deleveraging

Users may need to add additional funds to their margin account if their position loses value and their margin level falls below the required threshold. Auto-deleveraging is a mechanism that Poloniex employs to reduce risk. If the margin level becomes critically low, the platform will automatically close a portion of the user's positions to prevent liquidation.

Step 8: Settlement

Contract trading settlements occur on a periodic basis, typically daily or weekly. The settlement price for each contract is determined by the platform based on the underlying asset's market value. Profit or loss from the trade is realized and reflected in the user's margin account.