Seeing other investors making money in the cryptocurrency market, beginners are often eager to make an investment. However, without an understanding of the nature of digital currency or the logic of contract transaction, how can you make profits in this market?
We will take the USDT contract as an example to share some trading experience and basic knowledge for novice investors.
Concept and Deposit
Contract trading, in which investors can amplify funds by using the leverage and make profits through two-direction trading. It has got Digital Contract, USDT Contract, and Regular Contract, among them, USDT Contract is the main innovative product of 58COIN. With the features of trading with USDT, the lowest trading costs, two-direction trading, and high fund utilization, USDT Contract is widely favored by investors.
After understanding the basic concepts, we are about to start the actual transaction. Take USDT as an example. Before trading, there must be USDT in your contract account. There are several ways to transfer-in USDT:
- Deposit. Log in to the account and complete the basic and advanced verification first, then click on “Assets” and select “Deposit”, and you can transfer USDT from other exchanges or your wallet to contract account.
Note: This wallet is not the pocket-sized case that used for holding papers and paper money, but a tool for storing keys.
2. Through OTC Trading. You can buy USDT through OTC trading, and currently, OTC trading is free on 58COIN.
3. Mortgage Loan. If you have other cryptocurrencies in your account and do not want to sell them, then you can choose the mortgage loan with only 0.02% daily interest rate.
Special Reminder: You can trade in two directions in contract trading. If you see the bullish trend, then you may buy long, and you’ll make profits if the price rises or suffer loss if the price falls. If you see the bearish trend, then you may sell short, and you’ll make profits if the price falls, or you’ll suffer loss and even be liquidated if the price rises.
What does “Leverage”, “Market Price”, “Limit Price”, “Position” mean?
Since you’ve got USDT in the contract account, trading is available now!
Enter the USDT contract trading page, select the trading pair you preferred on the left, take BTCUSDT as an example. By entering “leverage”, “price” and “positions (lots)”, you can place an order at the bottom right of the “Order Zone”. Seeing the bullish trend, then choose “open long”; or seeing the bearish trend, then choose “open short”, thus a buy/sell order will be successfully submitted.
After submitting the order, if the transaction is not executed immediately, you can see the order details in “Orders” under the K-line. If the transaction is executed immediately, it means you’ve successfully opened a position. Then you can view transaction details in “Executed”, and see “Avg. Holding Price”, “Margin”, “Unrealized PNL” and other information in “Positions”.
- About Leverage: Currently, 58COIN offers 2x, 3x, 5x, 10x, 20x, 33x, 50x, and 100x leverages. Many novices mistakenly believe that the larger leverage they choose, the more profits they will get. However, this is not the case, the essence of leverage is “throw a sprat to catch a herring”.
The profit calculation formula is, Realized PNL (long) = (Closing Price — Opening Price) * Positions (where the unit is BTC). It can be seen from this formula that the profit and loss mainly depend on the closing/opening price and has nothing to do with the leverage.
What related to leverage is the amount of margin for opening a position.
It is not difficult to find from the above figure that under the premise of the same opening price, positions and closing price, the leverage multiplier only affects the amount of the margin and the ROR of principal, and the actual earnings are not affected by the leverage.
2. About Market Order and Limit Order: Market Orders are transactions meant to execute as quickly as possible at the present or market price. Conversely, a limit order sets the maximum or minimum price at which you are willing to sell or buy. If you are not trading in an emergency, you can choose limit order, which can offer you good entry and exit points. If the market fluctuates drastically or you want a 100% execution, you can choose the market order to make profits.
Risk Monitoring and Closing Positions
“Assets”, “Available Assets” and other information can be viewed in “My Assets”. You need to pay special attention to the “Risk Level” at the top. When the risk is >50%, the risk indicator will change from green to red. When the risk is >90%, you will receive an alert message. When the risk is 100%, the assets in your account are insufficient to meet the maintenance margin call, and your account will enter the liquidation process.
If you want to close your positions, click on “Positions” and select single “Close” or “Close All”.
The above is the simple operation tutorial of USDT contract. Of course, news and technical aspects are the most important aspects of trading contracts. Novices should not enter the market blindly, you need to briefly understand the relevant concepts and some basic knowledge about K-line before start the contract transaction.