Position Exchange

<h2 id="header-0"><strong>Terminologies of futures trading</strong></h2><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/bf5829be8ce84fc4bd202f4b3b69a6f7.jpeg" /><p></p><p>Futures are standardized contracts that allow the holder to buy or sell an asset at an agreed-upon price on a specified date. Here are some terms that you need to understand when joining <a href="https://coinmarketcap.com/community/articles/6373759fd81e325077b6d356" rel="noopener noreferrer nofollow">futures trading</a>.</p><h3 id="strong-leverage-strong"><strong>Leverage</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/02e20d577772455ab20852fa3909fdf2.png" /><p></p><p>Leverage refers to using borrowed capital to trade cryptocurrencies or other financial assets.  It amplifies your buying or selling power and allows you to control large amounts of a commodity or security with a comparatively small amount of capital. Depending on the crypto exchange you trade on, you could borrow up to 100 times your account balance. Leverage can magnify your profits or losses by the same magnitude.</p><h3 id="strong-initial-margin-strong"><strong>Initial margin</strong></h3><p>The initial margin is the amount required by the exchange to initiate a futures position. In derivatives markets, the initial margin is one of two types of collateral required to protect a party to a contract in the event of default by the other counterparty.</p><h3 id="strong-margin-call-strong"><strong>Margin call</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/01894c6714674a54acff48f9b4a5cf7f.png" /><p></p><p>A margin call is a demand to maintain one’s current position by depositing enough money to re-establish an adequate margin in the account. A margin call is required once an account&#39;s initial margin has been reduced to below the maintenance margin level.</p><h3 id="strong-liquidation-strong"><strong>Liquidation</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/2e0835a4c8de48e4a1339b918f808fce.jpg" /><p></p><p>Liquidation refers to when an exchange forcefully closes a trader’s leveraged position because of a partial or total loss of the trader’s initial margin. Liquidation happens if a position lacks the funds required to keep a leveraged trade open.</p><h3 id="strong-pnl-strong"><strong>PnL</strong></h3><p>PnL stands for profit and loss, and it can be either realized or unrealized. It can be used to describe the change in the value of a trader’s positions. When you have open positions, your PnL is unrealized, meaning it’s still changing in response to market moves. When you close your positions, the unrealized PnL becomes the realized PnL.</p><p>Realized PNL is profits and losses on completed trade transactions, while unrealized one is profits and losses associated with uncompleted transactions.</p><h2 id="header-1"><strong>Criteria to choose exchanges</strong></h2><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/8c0cb3ca58a54050a195eac3b3f36aaf.png" /><p></p><p>There are a lot of factors to consider when choosing a crypto exchange for trading.</p><h3 id="strong-technology-background-strong"><strong>Technology background</strong></h3><p>Investors should be aware of cryptocurrency exchanges&#39; security, trading liquidity, and operating experience, as well as whether the exchange has suffered losses as a result of an attack and whether their technology is strong enough to deal with market volatility.</p><h3 id="strong-index-price-strong"><strong>Index Price</strong></h3><p>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. As a result, the index price data source is a vital factor in the anti-manipulation mechanism. The more markets the platform refers to, the harder it is to manipulate the trading.</p><h3 id="strong-stop-loss-and-take-profit-order-strong"><strong>Stop-Loss and Take-Profit Order</strong></h3><p>It is a risk-management tool for limiting losses on existing positions, as well as an automatic tool for entering 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. An order is submitted to the exchange when a stop order is triggered. Therefore, you should choose an exchange with these risk-management tools.</p><h2 id="header-2"><strong>Top tips</strong></h2><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/e63f6e921c8242629f73d87a9a2d6619.jpg" /><p></p><p>In order to maximize returns from trading perpetual contracts on a derivatives exchange, take a look at these 8 useful tips:</p><h3 id="strong-do-strong"><strong>DO</strong></h3><ul><li><ul><li>Use the “No Expiration Date” Feature to Your Advantage</li><li>Use Stop-Loss &amp; Take-Profit orders</li><li>Ensure You Have a Diverse Portfolio</li><li>Take Advantage of Leverage</li><li>Make Your Own Research</li><li><strong>TRADE ON DEX!</strong></li></ul></li></ul><h3 id="strong-don-t-strong"><strong>DON’T</strong></h3><ul><li><ul><li>Be Afraid to Close the Contract</li><li>Spend More Than You Can Afford</li><li>Just Choose Any Exchange That Offers Perpetual Contracts</li><li><strong>TRADE ON CEX!</strong></li></ul></li></ul><h2 id="header-3"><strong>Conclusion</strong></h2><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/810db32c0a244750a73179ecbeeb821b.png" /><p></p><p>Although several established exchanges have now begun to include perpetual contracts in their offerings, only a derivatives-focused exchange can truly help you get the most from your investment.</p><p>Position Exchange’s development teams are working hard on the ambitious project of the <a href="https://coinmarketcap.com/community/articles/6369d12c0472b07ba6638b79" rel="noopener noreferrer nofollow">Decentralized Perpetual Trading Protocol (DPTP) version 2</a> with smoother orderbook processing capabilities and lower operating costs. This version includes Futures Bridge and improved functions, along with a new user interface.</p><p>The birth of <a href="https://coinmarketcap.com/community/articles/6369d12c0472b07ba6638b79" rel="noopener noreferrer nofollow">DPTP 2.0</a> will eliminate the problem of interoperability as it will allow users to participate in transactions with multiple blockchains through Futures Bridge while enhancing the user experience with lower slippage, lower cost, and greater transaction volume compared to the existing version.</p><p>We are currently launching its testnet along with an <a href="https://discord.com/invite/position-exchange" rel="noopener noreferrer nofollow">Incentivized Testnet Program</a> with a prize pool of up to $30,000 as a preparation stage for the best and bug-free version of the DPTP 2.0 mainnet. Participating in the <a href="https://discord.com/invite/position-exchange" rel="noopener noreferrer nofollow">#POSITestnet</a> to try our product and apply these tips above now!</p>

Perpetual Trading Tips

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PositionExchange

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