What is Contract Trading?
While spot trading allows investors to profit from rising cryptocurrency prices, contract trading offers opportunities to profit from both upward and downward price movements. By entering long (buy) or short (sell) positions, traders can capitalize on price fluctuations of underlying assets like Bitcoin:
- Long Position: Profits when asset prices rise, loses when prices fall
- Short Position: Profits when asset prices fall, loses when prices rise
Types of Contracts
OKX provides two primary contract products based on settlement mechanisms:
Futures Contracts:
- Have predetermined expiration dates
- Automatically settle at expiration using the arithmetic average of the index price's last hour
- Categories: Weekly, Bi-weekly, Quarterly, and Bi-quarterly contracts
Perpetual Contracts:
- No expiration date
- Utilize funding rate mechanism to maintain price alignment with spot markets
- Long positions pay funding fees to shorts when bullish sentiment dominates (and vice versa)
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Margin Types
Contracts further differentiate by margin collateral:
| Contract Type | Margin Collateral Options |
|---|---|
| Futures Contracts | USDT-margined / Coin-margined |
| Perpetual Contracts | USDT-margined / Coin-margined |
Margin represents a small percentage of the contract value required as collateral to open positions. Traders can choose between:
- USDT Margins: Stablecoin-denominated
- Coin Margins: Denominated in the traded pair's base currency
Step-by-Step Contract Trading Guide
(A) Account Configuration
Enable Trading Mode:
- Select either "Single-currency Margin" or "Cross-currency Margin" mode
Customize Settings:
- Set preferred trading units
- Configure order placement styles
(B) Trading Futures Contracts
Example: Coin-margined Weekly Futures
Asset Transfer:
- Move funds from main account to trading account
Contract Selection:
- Navigate to trading interface
- Search for desired cryptocurrency pair
- Select "Futures" > "Coin-margined" > Choose expiration cycle
Order Placement:
- Choose account mode and order type
- Input price and quantity
- Click "Buy/Long" (bullish) or "Sell/Short" (bearish)
Position Management:
- Monitor margin, P&L, and liquidation price
- Set stop-loss/take-profit orders
- Close positions manually or via market orders
(C) Trading Perpetual Contracts
Example: USDT-margined Perpetual Contracts
- Asset Transfer (if needed)
Contract Selection:
- Select "Perpetual" > "USDT-margined" contracts
- Order Placement (same as futures)
- Position Management (same as futures)
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Advanced Trading Tips
Risk Management:
- Never risk more than 1-2% of capital per trade
- Always use stop-loss orders
Leverage Caution:
- Higher leverage increases both potential profits and risks
- Beginners should start with lower leverage (5-10x)
Market Analysis:
- Combine technical and fundamental analysis
- Monitor funding rates for sentiment indicators
FAQ Section
Q: What's the minimum contract trading amount on OKX?
A: Minimums vary by contract type and pair, typically starting from $10 equivalent.
Q: Can I trade contracts 24/7?
A: Yes, cryptocurrency contract markets operate continuously.
Q: How are funding rates calculated?
A: Rates are determined by the difference between perpetual contract prices and spot indices, typically exchanged every 8 hours.
Q: What happens if my position reaches liquidation price?
A: The system automatically closes positions to prevent negative balances.
Q: Are there tax implications for contract trading profits?
A: Tax regulations vary by jurisdiction—consult local tax authorities.
Q: How do I choose between futures and perpetual contracts?
A: Futures suit directional bets with defined timelines, while perpetuals offer flexibility for ongoing positions.
Remember: Contract trading carries substantial risk—only trade with funds you can afford to lose. Always conduct thorough research before executing trades.