Perpetual contracts are a popular derivative product in the cryptocurrency market, allowing traders to speculate on the future price of an asset without an expiry date. REXUSDT is one such trading pair offered on the MEXC exchange. This guide explains the key aspects of trading this contract, focusing on its USDT-margined perpetual structure and essential risk management practices.
What Are USDT-Margined Perpetual Contracts?
USDT-margined perpetual contracts are agreements to buy or sell an asset at a predetermined price, with USDT (Tether) used as the base currency for margin and profit/loss calculation. Unlike traditional futures, these contracts do not have an expiration date, allowing positions to be held indefinitely, provided maintenance margin requirements are met.
Key features include:
- Leverage: Traders can amplify their exposure to price movements.
- Long/Short Positions: Profit from both rising and falling markets.
- Funding Rates: Periodic payments between long and short traders to keep the contract price aligned with the spot market.
Essential Risk Disclaimer for Contract Trading
Trading perpetual contracts involves significant risk and is not suitable for all investors. The following points outline critical disclaimers and potential risks associated with using automated or copy trading features on platforms like MEXC.
1. Limitation of Liability
The exchange is not liable for losses arising from:
- Force Majeure: Events beyond reasonable control, such as system failures, market volatility, or unforeseen circumstances.
- User Misconduct: This includes engaging in prohibited activities like market manipulation, providing fraudulent information during account registration, or other malicious acts.
- Misinterpretation of Services: Losses resulting from a misunderstanding of how the platform's services or contract features work.
- Third-Party Data: Costs or losses incurred from relying on data, information, or trades provided through the platform.
2. Risks of Automated and Copy Trading
Many platforms offer features that can execute trades automatically or allow you to copy the strategies of other traders. These come with inherent risks:
- Automatic Execution: Your account may open or close positions without your manual intervention, which could lead to unexpected losses.
- No Success Guarantee: There is no guarantee that a copied trade will be successful or even executed. Copying can fail due to insufficient minimum copy amount, inadequate available margin, triggering of risk controls, or violation of platform terms.
- Service Delays or Failures: Delays in service execution can result in significant financial loss, and the service may fail entirely.
3. Investor Responsibility and Due Diligence
The ultimate responsibility for investment decisions lies with you, the trader.
- Independent Assessment: You must independently research and judge any investment decision. Consider your overall financial situation, including financial planning, before using these highly speculative services.
- No Investment Advice: Information on the platform is intended for dynamic market updates and informational services only. It does not constitute investment advice. You must make independent investment decisions.
- Potential for Greater Losses: When copy trading, be aware that your losses could potentially be greater than those of the trader you are copying. All trading can result in both profit and loss.
Why Copy Trading Might Fail
Even if you intend to copy a trader, execution is not always guaranteed. Common reasons for failure include:
- The trader has reached their maximum number of followers.
- The trader has stopped their operations or strategy.
- Your account status is set as a "trader," not a "follower."
- There are no assets or funds in your account.
- The trader's order limit has reached its cap.
The platform monitors trader performance and reserves the right to suspend, stop, or prevent any trader from being copied.
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Frequently Asked Questions
Q: What is the main advantage of a USDT-margined perpetual contract?
A: The primary advantage is simplicity for traders who hold their capital primarily in USDT. All profits, losses, and margin requirements are calculated in USDT, making it easier to manage risk and understand P&L without converting between different currencies.
Q: Is copy trading on MEXC safe?
A: While the platform provides tools, copy trading is not without risk. There is no guarantee of profits, and you can lose more than the trader you copy. The platform does not guarantee the success of any trade and is not liable for losses resulting from the use of these automated features. Always conduct your own research.
Q: What should I do before starting to copy a trader?
A: Thoroughly review the trader's historical performance, their risk level, and their typical strategy. Most importantly, ensure this strategy aligns with your own financial goals and risk tolerance. Never invest more than you are willing to lose.
Q: Can I hold a perpetual contract forever?
A: Technically, yes, as there is no expiry date. However, you must constantly maintain the required margin in your account. If the market moves against your position and your equity falls below the maintenance margin level, your position will be liquidated.
Q: Who is responsible if an automated trade goes wrong?
A: The user bears full responsibility for any losses incurred from trades executed automatically through platform services. By using these features, you acknowledge and accept the risks involved.
Q: What does "force majeure" mean in the disclaimer?
A: It refers to extraordinary events or circumstances beyond the control of the exchange, such as natural disasters, war, strikes, riots, market collapse, government actions, or major system failures, which could prevent the platform from fulfilling its obligations.