How does the ProBit Global perpetual contract work?

Perpetual contracts, lacking a fixed expiration date, let traders hold positions indefinitely, offering leverage for amplified gains (and losses) while posing the risk of infinite losses if the market turns unfavorable.

Nov 24, 2024 at 05:51 pm

Step 1: Understanding Perpetual Contracts

Perpetual contracts are a type of futures contract that do not have a fixed expiration date. Instead, they track the underlying asset's price indefinitely, allowing traders to maintain their positions for as long as desired. Perpetual contracts offer leverage, enabling traders to increase their potential profits (and losses) by amplifying the impact of their trades. However, due to their lack of expiration, perpetual contracts have the potential for infinite losses if the market moves against the trader's position.

Step 2: Opening a Position

To open a perpetual contract position on ProBit Global, follow these steps:

• Choose the trading pair: Determine the perpetual contract you wish to trade, such as BTC/USDT or ETH/USDT.
• Set the leverage: Select the desired leverage level, which can range from 1x to 20x. Higher leverage amplifies your profits and losses.
• Input the order size: Enter the number of contracts you want to buy or sell, considering the leverage and your risk tolerance.
• Choose the order type: Specify the type of order to place, such as a market order (executed at the current market price) or a limit order (executed at a specified price).
• Place the order: Confirm your trade details and click "Buy" or "Sell" to open your position.

Step 3: Managing Your Position

Once you have opened a perpetual contract position, you can monitor and manage it in real-time. The key features to monitor include:

• Unrealised Profit/Loss: This reflects the current floating profit or loss of your position based on the current market price.
• Margin Required: This is the portion of your account balance that has been allocated to maintain your open position.
• Liquidation Price: This is the point at which your position will be forcibly closed if the market moves against you and your margin is depleted.

Step 4: Adjusting Leverage

If necessary, you can adjust the leverage of your perpetual contract position while it is still open. Leverage can be increased to amplify your potential profits or decreased to reduce your risk. However, increasing leverage also increases your risk of liquidation if the market moves against you.

Step 5: Closing Your Position

When you are ready to close your perpetual contract position, there are two main options:

• Market Order: This closes your position immediately at the current market price.
• Limit Order: This places an order to close your position at a specified price.

Once your closing order is executed, your position will be closed, and the profits or losses will be realized and credited or debited from your account balance.

Step 6: Funding and Settlement

Unlike traditional futures contracts, perpetual contracts use a mechanism called "funding" to ensure that the price of the contract remains close to the underlying asset's spot price. This funding process may result in either positive or negative "funding rates." Positive funding rates occur when long positions (buyers) pay short positions (sellers), while negative funding rates occur when short positions pay long positions. The funding rate is typically updated every 8 hours.

Benefits of ProBit Global Perpetual Contracts:

• Variety of Trading Pairs: ProBit Global offers a wide range of perpetual contract trading pairs, including major cryptocurrencies, fiat-denominated pairs, and synthetic indexes.
• Adjustable Leverage: Traders can customize the leverage of their positions to meet their risk tolerance and maximize potential profits.
• Real-Time Monitoring: The platform provides real-time updates on position profitability, margin requirements, and other key metrics, allowing for effective position management.
• Funding Mechanism: The funding mechanism helps maintain the stability of perpetual contract prices and reduces slippage risks.