Contract trading is a widely recognized method within the digital currency investment space. It allows for two-way trading, meaning investors can open long (buy) positions when they expect prices to rise or short (sell) positions when they anticipate a decline. All terms, including the digital asset involved, are agreed upon in advance, with the actual transaction occurring at a specified future date.
Among the various platforms available, OKX stands out as a popular choice for contract trading. This guide provides a step-by-step overview of how to engage in contract trading on OKX.
Getting Started with OKX Contract Trading
Account Registration
To begin trading contracts on OKX, you first need to create an account. Here's how:
- Visit the official OKX website and download the mobile app.
- On the homepage, tap "Register/Log In," then select "Register Now."
- Enter your email address and tap "Register." You will receive a six-digit verification code via email, valid for 10 minutes.
- Complete mobile number verification by entering your phone number and the SMS verification code sent to you.
- Select your country/region of residence, ensuring it matches the information on your identification documents.
- Set a strong account password to enhance security.
- Once registered, log in and navigate to the personal center to complete identity verification. Level 1 verification allows basic digital asset trading, while Level 2 offers higher transaction limits and additional features.
Basic Trading Configuration
Before starting, configure your trading settings according to your strategy:
- Enable contract trading and set your account mode to either single-currency margin or cross-currency margin.
- Customize trade units and order types based on your preference.
Trading Delivery Contracts
OKX offers two types of delivery contracts: USDT-margined and coin-margined. Below is an example using a quarterly coin-margined contract:
- Transfer the digital assets you intend to trade from your funding account to your trading account.
- On the trading page, select the desired currency pair. Choose "Delivery" under margin trading and select the contract period (weekly, bi-weekly, quarterly, etc.).
- Set your leverage multiplier, choose the account mode and order type, then enter the price and quantity.
- Click "Buy/Long" if you expect the price to increase or "Sell/Short" if you believe it will decrease.
- You can cancel any unfulfilled orders manually.
- Once an order is executed, you can monitor key metrics such as margin, profit, profit rate, and estimated liquidation price in the "Positions" section.
- Use stop-loss and take-profit features to manage risk, or close positions manually by entering the desired price and quantity.
👉 Explore more strategies for advanced contract trading
Can You Consistently Profit with Bitcoin Contracts?
While all investments carry risk, some traders use combined strategies like options and futures contracts to hedge their positions. This approach aims to generate returns regardless of market direction.
How Options and Futures Hedging Works
Suppose Bitcoin is currently priced at $10,000. You decide to open a 20x leveraged long position with $5,000 while simultaneously purchasing two put options with a 4-hour cycle as a hedge. Each option costs approximately $30, totaling $60. Each option contract corresponds to the value of one Bitcoin.
Note: A long futures position should be hedged with put options, while a short position is paired with call options.
Scenario 1: Bitcoin Rises by $200 (2%)
- Your leveraged long position yields a 40% profit ($2,000).
- The put options expire worthless, resulting in a loss of $60.
- Net profit: $1,580.
Scenario 2: Bitcoin Drops by $200 (2%)
- The long position loses 40% ($2,000).
- The put options gain $400 in value ($2,800).
- After deducting the $60 options cost, the net profit is $380.
Scenario 3: Bitcoin Rises by $500 (5%)
- The leveraged position doubles, yielding $5,000.
- The put options lose $60.
- Net profit: $4,580.
Scenario 4: Bitcoin Drops by $500 (5%)
- The long position is liquidated, resulting in a $5,000 loss.
- The put options gain $1,000 ($7,000).
- After accounting for the loss and the $60 cost, the net profit is $1,580.
This example demonstrates that even in the event of liquidation, a well-structured hedging strategy can still yield a profit. There are multiple ways to employ contract trading, and hedging is just one of them.
👉 View real-time tools for risk management
Frequently Asked Questions
What is the difference between coin-margined and USDT-margined contracts?
Coin-margined contracts require the base currency (like BTC) as collateral, while USDT-margined contracts use Tether (USDT). The latter is often simpler for traders who wish to maintain stablecoin-denominated profit and loss calculations.
Is contract trading suitable for beginners?
Contract trading involves significant risk due to leverage and market volatility. Beginners should start with small positions, use low leverage, and thoroughly educate themselves before investing larger amounts.
What is the purpose of identity verification on OKX?
Identity verification (KYC) enhances account security, helps prevent fraud, and unlocks higher withdrawal limits and access to more features like contract trading.
Can I trade contracts on OKX without leverage?
Yes, you can trade with 1x leverage, which means no borrowed funds are used. This reduces risk but also limits potential returns compared to higher leverage.
How do I avoid liquidation in contract trading?
Use stop-loss orders, avoid excessive leverage, monitor your margin ratio, and consider hedging strategies to protect against adverse market movements.
What are the trading hours for cryptocurrency contracts?
Cryptocurrency contracts trade 24/7, unlike traditional markets. This allows continuous trading but also requires careful risk management due to constant price fluctuations.
Conclusion
OKX provides a robust and user-friendly platform for contract trading. Whether you are a beginner or an experienced trader, understanding leverage, risk management, and strategic tools like hedging is essential. Always invest responsibly and never risk more than you can afford to lose. Continuous learning and practice are key to navigating the dynamic world of cryptocurrency contracts.