Poloniex contract trading steps

Poloniex's contract trading platform empowers users to capitalize on price fluctuations without possessing the underlying assets, offering access to perpetual and futures contracts with customizable specifications for risk management and profit maximization.

Nov 27, 2024 at 09:01 am

Poloniex Contract Trading: A Comprehensive Guide

Poloniex, a leading cryptocurrency exchange, has recently introduced contract trading, allowing users to speculate on the price of underlying assets without owning them outright. This guide will provide a detailed walkthrough of the steps involved in contract trading on Poloniex.

Before beginning, it is crucial to note that contract trading carries significant risk and may result in the loss of capital. Traders should thoroughly understand the mechanics of contract trading and manage their risk accordingly.

Step 1: Create an Account

To begin contract trading on Poloniex, users must create an account. The registration process is straightforward, requiring only basic personal information and email verification. Once the account is verified, users can access the exchange's full suite of services, including contract trading.

Step 2: Fund Your Account

To participate in contract trading, users must fund their Poloniex account. The exchange supports a wide range of deposit methods, including cryptocurrency, wire transfer, and credit card. Once funds are deposited, users can allocate them to their contract trading account.

Step 3: Choose a Contract

Poloniex offers a variety of contract types, each with unique characteristics. Users can choose from perpetual contracts, which have no fixed expiry date, or futures contracts, which expire on a specific date. Each contract is based on an underlying asset, such as Bitcoin, Ethereum, or Ripple.

Step 4: Understand Contract Specifications

Before trading, it is essential to understand the specifications of the chosen contract. These specifications include:

• Contract Size: The number of units of the underlying asset represented by each contract.
• Leverage: The amount of borrowed capital that can be used to amplify potential profits.
• Margin: The minimum amount of funds required to maintain an open position.
• Funding Rate: The periodic fee charged or paid to adjust the contract price to the spot price.

Step 5: Place an Order

To initiate a contract trade, users need to place an order. Poloniex supports various order types, including:

• Limit Order: An order placed at a specified price.
• Market Order: An order executed at the current market price.
• Stop Order: An order triggered when the price reaches a specific level.

Step 6: Monitor Your Positions

Once an order is placed, users can monitor their positions in the "Positions" tab. This tab provides real-time updates on the price of the underlying asset, the profit/loss, and any other relevant information. Traders can also adjust their positions or close them partially or fully.

Step 7: Manage Risk

Contract trading involves inherent risks that need to be carefully managed. Traders should implement proper risk management strategies, such as:

• Setting Stop-Loss Orders: Placing orders to automatically close positions when the price moves against the trader's expectations.
• Using Leverage Prudently: Leveraging can amplify profits, but it also increases losses. Traders should only use leverage that they can afford to lose.
• Hedging: Using opposite positions in different contracts to reduce overall exposure.

Step 8: Withdraw Funds

When desired, traders can withdraw their funds from their Poloniex contract trading account. The exchange supports multiple withdrawal methods, and the processing time may vary depending on the chosen method.