How to play BitFlyer delivery contracts

Traders can monitor their open positions, manage risk through margin calls and stop orders, and follow industry best practices to maximize profits and mitigate potential losses when trading delivery contracts on BitFlyer.

Nov 08, 2024 at 09:30 am

How to Play BitFlyer Delivery Contracts: A Comprehensive Guide

Introduction

BitFlyer, Japan's largest cryptocurrency exchange, offers a comprehensive suite of delivery contracts for traders of all experience levels. These contracts allow traders to speculate on the future price of cryptocurrencies without having to take ownership of the underlying assets. This guide will provide a step-by-step tutorial on how to play BitFlyer delivery contracts, including account setup, order types, risks, and best practices.

Step 1: Open a BitFlyer Account

To trade delivery contracts on BitFlyer, traders must first open an account. The process is relatively straightforward and can be completed online or via the BitFlyer mobile app. Required information includes:

• Personal information (name, address, contact details)
• Proof of identity (e.g., passport, driver's license)
• Proof of residency (e.g., utility bill, bank statement)

Once the account is verified, traders can deposit funds and begin trading.

Step 2: Understand Delivery Contracts

BitFlyer offers delivery contracts on various cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. Delivery contracts are standardized agreements to buy or sell a specific quantity of an asset at a predetermined price on a specific date. The difference between the contract price and the underlying asset's spot price at the settlement date determines the profit or loss for traders.

Key features of delivery contracts include:

• Contract size: The amount of the underlying asset being traded (e.g., 1 BTC for Bitcoin contracts)
• Contract duration: The period during which the contract is open for trading (e.g., 1 month)
• Settlement date: The date on which the contracts expire and the underlying assets are exchanged

Step 3: Choose an Order Type

BitFlyer offers two main order types for delivery contracts:

• Market Order: Executes immediately at the current market price.
• Limit Order: Specifies a desired price for execution. The order will only execute if the market price reaches or exceeds the specified price.

Traders can also use advanced order types such as stop orders and conditional orders to automate their trading strategies.

Step 4: Place an Order

To place an order, traders need to select the desired cryptocurrency, contract duration, and order type. They can then specify the quantity of contracts to trade and the desired execution price if using a limit order. Once the order details are entered, traders can click "Buy" or "Sell" to submit the order.

Step 5: Manage Your Positions

Once an order is placed, traders can monitor their positions in the "Positions" tab. This tab shows the current status of all open contracts, including profit/loss, margin requirements, and liquidation price. Traders can manually close their positions at any time before the settlement date.

Step 6: Understand the Risks

Delivery contracts are leveraged products that can amplify both profits and losses. Traders should be aware of the following risks:

• Margin Calls: If the trader's account falls below the required margin level, they will receive a margin call and may be forced to liquidate their positions at a loss.
• Liquidations: If the trader's account becomes insolvent, their positions will be automatically liquidated to cover the losses.
• Price Volatility: The prices of cryptocurrencies can fluctuate rapidly, which can lead to significant losses in a short period.

Step 7: Best Practices

To maximize profits and mitigate risks when trading delivery contracts, traders should follow these best practices:

• Use Stop Orders: Stop orders can help limit losses by automatically closing positions if the market price moves against the trader's position.
• Manage Risk: Determine the maximum risk that can be tolerated and trade accordingly.
• Stay Informed: Keep up-to-date with the latest news and developments that may affect the cryptocurrency market.
• Consider Hedging: Use options or other strategies to reduce the risk of large losses.