How to trade perpetual contracts on AscendEX

Perpetual contracts at AscendEX feature underlying assets in cryptocurrencies, commodities, and indices, allowing for leverage and potential gain maximization but also heightening the necessity of prudent risk management.

Nov 25, 2024 at 06:54 am

How to Trade Perpetual Contracts on AscendEX

Perpetual contracts, also known as perpetual futures, are a type of derivative contract that allows traders to speculate on the future price of an underlying asset without having to take delivery of the physical asset. Perpetual contracts are traded on margin, which means that traders can use leverage to increase their potential profits. However, leverage also increases the risk of losses, so it is important to use it wisely.

If you are new to perpetual contracts, it is important to understand the basics before you start trading. In this guide, we will explain everything you need to know about perpetual contracts, including how to open a position, how to close a position, and how to manage your risk.

How to Open a Position

To open a perpetual contract position, you will need to:

1. Choose an underlying asset. The first step is to choose the underlying asset that you want to trade. AscendEX offers perpetual contracts on a variety of underlying assets, including cryptocurrencies, commodities, and indices.
2. Select a contract size. The next step is to select a contract size. The contract size is the amount of the underlying asset that you are betting on. AscendEX offers a variety of contract sizes, so you can choose the one that is right for your trading style.
3. Decide on a leverage level. Leverage is a tool that can be used to increase your potential profits. However, leverage also increases the risk of losses, so it is important to use it wisely. AscendEX offers a variety of leverage levels, so you can choose the one that is right for your risk tolerance.
4. Place an order. Once you have chosen an underlying asset, contract size, and leverage level, you can place an order to open a position. You can place a market order or a limit order. A market order will be executed at the current market price, while a limit order will be executed at a specified price.

How to Close a Position

To close a perpetual contract position, you will need to:

1. Decide whether to take profit or cut your losses. The first step is to decide whether to take profit or cut your losses. If you are in profit, you can close your position to lock in your gains. If you are in a loss, you can close your position to limit your losses.
2. Place an order to close your position. Once you have decided whether to take profit or cut your losses, you can place an order to close your position. You can place a market order or a limit order. A market order will be executed at the current market price, while a limit order will be executed at a specified price.

How to Manage Your Risk

Managing your risk is one of the most important aspects of trading perpetual contracts. There are a number of different risk management strategies that you can use, such as:

1. Stop-loss orders. A stop-loss order is an order that is placed to automatically close your position if the price of the underlying asset reaches a specified level. Stop-loss orders can help you to limit your losses if the market moves against you.
2. Take-profit orders. A take-profit order is an order that is placed to automatically close your position if the price of the underlying asset reaches a specified level. Take-profit orders can help you to lock in your gains if the market moves in your favor.
3. Position sizing. Position sizing is the process of determining the amount of money that you are willing to risk on a single trade. Proper position sizing can help you to manage your risk and avoid catastrophic losses.

Conclusion

Perpetual contracts are a powerful tool that can be used to speculate on the future price of an underlying asset. However, it is important to understand the risks involved before you start trading. By following the steps outlined in this guide, you can help to minimize your risks and increase your chances of success.