What is a perpetual futures contract?
A Perpetual Futures Contract is a cryptocurrency derivative, but unlike the traditional form of futures, it doesn’t have an expiry date. So one can hold a position for an indefinite period of time. The main idea behind contract trading is to benefit from price changes without actually owning the asset, for there is no actual delivery of the underlying cryptocurrency. Other than that, the trading of perpetual contracts is based on an underlying Index Price. The Perpetual Contract is an attempt to take advantage of a Futures Contract — specifically, the non-delivery of the actual commodity — while mimicking the behaviour of the Spot market to reduce the price gap between the Futures Price and the Mark Price. This is a marked improvement compared to the traditional Futures Contract, which can have prolonged or even permanent differences versus the Spot Price.
Tips on Perpetual Contracts Trading
1. Start with trial funds in simulate trading
Majority of the excellent exchange that provides perpetual contracts trading offer free trial funds in simulate trading. These allow users to experience the platform’s full functions without any risking. Although users can never expect to make money using simulate trading, they can gain trading strategies and get used to the exchange. Simulate trading provides great opportunity to start trading as you invest the virtual funds instead of your own real money, which is the best opportunity before you dive into trading.
2. Look for Trading Consistency
Investors who try to make a big single investment always normally end up losing money. Beginners should focus on making multiple, smaller investments, and seek to turn a small but decent profit. Plan investment strategy beforehand, once you have calculated all your trading costs. You should only seek to add between 5% to 10% to this value before closing your position.
3. Setting Leverage Cautiously
While leverage may seem like free money, you need to understand that it is, in fact, a loan that you will have to pay back, even if the asset doesn’t perform as you wish.
Most exchanges offering perpetual contract trading will allow users to take 100x leverage on position, which makes this contract highly volatile, you should only trade the amounts you are willing to lose. It is better to seek smaller leveraging as it helps you limit your risk.
4. Don’t Chase a Loss
If a trade has not gone to plan, don’t over-trade to try and recoup your losses. As long as you haven’t exposed yourself to an unfeasible risk, you should be able to manage the loss. Remember to use limits and to keep emotions out of trading. Your decisions should be based on logic, reason, and strategy.
5.Monitor your Investment
Perpetual contract tradings tend to be highly volatile, that means investors should follow their progress closely. Limits can step in and execute instructions when you’re not around, but you should not simply rely on them, because errors do occur. Price-gapping might also deactivate any limits altogether. You might also need to close your positions daily, so as not to incur overnight charges.
6. Utilize risk-management tools properly
Stop-loss and take-profit Order allow you to anticipate both profit and loss. That is, investors can dictate how much money they can make and how much they can lose on their trades. The proper use of risk-management tools can help you to better establish their trading system so that you are more likely to continue to make money in contract trading.
How to choose a perpetual contract exchange?
When comes to choosing crypto exchange for trading. There always have some factors we need to take into consideration.
Technology background: Investors need to know the security conditions, trading liquidity and operating experience of cryptocurrency exchanges, whether the exchange you choose had suffered losses caused by the attack and are their technology supports strong enough to cope with market volatility.
Index Price: The trading of perpetual contracts is based on an underlying Index Price. The Index Price consists of the average price of an asset, according to major spot markets and their relative trading volume. So the index price data source is a crucial factor of the anti-manipulation mechanism. The more markets the platform refer to, the harder to manipulating the trading.
Stop-Loss and Take-Profit Order：It is a risk-management tool to limit losses on existing positions, and also an automatic tool to enter the market at the desired entry point without manually waiting for the market to place the order. Stop orders are implemented as a brokerage function and triggered stop orders are not guaranteed to be executed on the exchange at the exact time of triggering. Once a stop order is triggered, an order is submitted to the exchange. So you’d better choose an exchange with these risk-management tools.
Liquidity of USDT Contracts：
USDT is the best collateral to make money in a bear market because its prices are less volatile. So when you choose an exchange, you should check the trading depth of the USDT contract of the exchange and choose one with good depth of the USDT contract.
Here is the comparison of exchanges provided perpetual contract trading：
Since ZBG has set up by ZB Group in July 2018. ZBG is always operating on the frontier of crypto assets trading in Asian markets and can be accessed by worldwide investors.
In March 2020, ZBG launched the perpetual contract trading function to move towards cryptocurrency derivatives markets.
As the above table shows, ZBG perpetual contract trading not only excel other similar rivals on the anti-manipulation mechanism and safe liquidation but also have advantages on its all-round features:
1. Demo trail funds without limitations
2. Trade as fast as you can click
Enjoy immediate execution of your market orders
3. Fast learning community
ZBG interactive community of millions of users and free 50,000,000 trial funds will help investors learn the basics.
4. 7*24 hours at your service
5. Fiat gate
Users can deposit fiat money (RMB, USDT, HKD, VND) to ZBG account directly.
6. Trading calculator feature — to preview potential profits and losses
7. Yield sharing
8. Incentive activity
9. Price and real-time market alerts
10. Multiple languages support
ZBG supports 8 pairs which include BTCUSD, ETHUSD, XRPUSD and more. For Bitcoin, ETH, EOS, ETC, LTC contracts, we offer up to 100x leverage whereas for others the leverage is between 1x to 50x. The first five orders on ZBG’s USDT contract totalled more than 50 BTC, and 8 mainstream coins can be traded with USDT. A variety of digital currencies can be used as margin on ZBG, and different types of contracts use different amounts of margin. ZBG Exchange users can deposit fiat money (RMB, USDT, HKD, VND) to ZBG account directly.
ZBG unique risk-management tools are available in both stop market order and stop-limit order, and they can show a clear advantage when liquidity dries up. The trading interface is not only intuitive but also has an order book, depth chart, price chart, and a host of technical analysis tools, that makes ZBG more easily to use for beginners. What’s more, ZBG provides users with the option of starting simulate trading with a very short registration. Each user can begin their contract trading with a sum of trial funds.
Risks：Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. ZBG is founded to provide convenience trading for the digital asset enthusiasts and won’t assume any guarantee or compensation for the investment value of the digital asset. Please make a rational judgment on your ability to invest and take cautious investment decisions.