How to play contracts in OKEX

Leverage, a tool used to magnify potential profits, increases risk proportionately, which can lead to forced position closure if margin requirements are not met.

Feb 04, 2025 at 05:42 pm

Key Points:

• Choosing a Suitable Contract Type
• Understanding Leverage and Margin
• Placing an Order
• Managing Positions
• Avoiding Liquidation
• Advanced Trading Techniques
• Risk Management Strategies

Choosing a Suitable Contract Type:

• Perpetual Swap: A contract with no expiry date that allows for perpetual trading. No physical delivery is involved, and settlement occurs in the underlying asset (e.g., BTC).
• Futures Contract: A contract with a fixed expiry date that obligates the buyer to buy or the seller to sell the underlying asset at a specified price. Physical delivery may or may not be involved.

Understanding Leverage and Margin:

• Leverage: The use of borrowed funds to increase potential profits. Higher leverage amplifies both gains and losses.
• Margin: Collateral deposited to secure leveraged positions. Margins are expressed as a percentage of the contract value.

Placing an Order:

• Limit Order: An order to buy or sell at a specific price. Executed only when the market price meets the specified price.
• Market Order: An order to buy or sell immediately at the best available market price.
• Stop-Market Order: An order to buy or sell above or below a specified trigger price. Executed once the trigger price is reached.

Managing Positions:

• Take Profit Order: An order to close a position automatically when a specified profit level is reached.
• Stop Loss Order: An order to close a position automatically when a specified loss level is reached.
• Trailing Stop Loss: A stop-loss order that moves dynamically, following the price of the underlying asset by a specified margin.

Avoiding Liquidation:

• Liquidation: Forced closure of a position when the margin balance becomes insufficient to cover losses.
• Margin Call: A warning notification issued when the margin balance falls below a certain level.
• Risk Management: Employing strategies to manage risk, such as position sizing, leverage adjustment, and hedging.

Advanced Trading Techniques:

• Arbitrage: Exploiting price differences between different exchanges to generate profits.
• Scalping: Making numerous small trades within a short period of time.
• Technical Analysis: Using chart patterns and indicators to predict price movements.

Risk Management Strategies:

• Position Sizing: Limiting the size of positions based on available capital and risk tolerance.
• Leverage Management: Using leverage prudently and adjusting it based on market conditions.
• Hedging: Protecting positions against adverse price movements by taking opposing positions in other markets.
• Risk-Reward Ratio: Measuring the potential reward for a given level of risk before placing a trade.

FAQs:

What is the minimum margin required in OKEX?

The minimum margin requirement varies depending on the contract type and the underlying asset.

What is the maximum leverage available on OKEX?

The maximum leverage available also varies depending on the contract type and the underlying asset. Typically, leverage can range from 2x to 100x.

What is a "Mark Price" in OKEX?

The Mark Price is a real-time fair value of an asset derived from the funding rates and the underlying spot index price. It is used to calculate liquidations and settlement prices.

What is the difference between "Isolated Margin" and "Cross Margin" in OKEX?

Isolated Margin allocates a specific margin balance to each position, while Cross Margin uses the entire account balance as a single collective margin.

How do I avoid liquidation in OKEX?

• Monitor margin levels regularly.
• Use stop-loss orders to limit potential losses.
• Manage leverage and position sizing prudently.
• Employ risk management strategies such as hedging and position adjustment.