Contract trading allows buyers and sellers to agree on trading a specific asset at a predetermined price and quantity in the future, enabling investors to profit from both rising and falling markets. For newcomers, understanding how to navigate this space is crucial. This guide delves into contract trading on OKX Exchange, covering types, risks, and step-by-step execution.
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What Is Contract Trading? Risks and Rewards
Contract trading involves agreements to buy or sell assets at future dates under specified terms. Unlike spot trading, contracts amplify gains and risks through leverage. Key characteristics:
- Leverage: Multiplies capital exposure (e.g., 10x leverage = 10x profit or loss).
- Two-way earnings: Profit from price rises ("long") or declines ("short").
- High risk: Requires careful risk management to avoid liquidation.
Example: A BTC contract at $50,000 with 10x leverage means controlling $500,000 in value with $50,000 collateral. A 2% price move yields 20% profit or loss.
Types of Contract Trading
OKX offers four primary contract types:
| Type | Description | Settlement |
|--------------------|-----------------------------------------------------------------------------|----------------------|
| Delivery Contracts | Fixed expiry dates (weekly, quarterly). Settled at marked price upon expiry. | Physical/cash |
| Perpetual Contracts | No expiry. Uses "funding fees" to tether prices to spot markets. | Continuous (8-hour intervals) |
| Coin-Margined | Collateralized in the base currency (e.g., BTC). | Coin-denominated |
| USDT-Margined | Collateralized in stablecoins (USDT/USDC). Simplifies multi-coin trading. | USDT/USDC-denominated|
👉 Compare contract types on OKX
Step-by-Step Contract Trading on OKX
Account Setup
- Register on OKX and complete KYC verification.
- Deposit USDT, BTC, or other supported assets.
Navigate to Contract Trading
- Select "Trade" > "Contracts." Choose between Perpetual or Delivery contracts.
Configure Parameters
- Leverage: Adjust multiplier (e.g., 5x–100x). Higher leverage = higher risk.
Margin Mode:
- Cross Margin: Shared collateral across positions.
- Isolated Margin: Separate collateral per position.
Place Orders
- Buy/Long: Profit if price rises.
- Sell/Short: Profit if price falls.
Monitor and Close Positions
- Set stop-loss/take-profit orders to automate exits.
- Liquidations occur if margin falls below maintenance levels.
Fees and Funding Costs
Trading Fees:
- Maker: 0.02%–0.05% (rebates for adding liquidity).
- Taker: 0.05%–0.07%.
Funding Fees (Perpetual Only):
- Paid/received every 8 hours to align contract prices with spot markets.
- Rate fluctuates based on market demand.
FAQ
Q: How is contract profit calculated?
A: Profit = (Exit Price − Entry Price) × Contract Size × Leverage. For USDT contracts, profits are in USDT.
Q: What triggers liquidation?
A: When margin ratio ≤100%, positions auto-close to prevent further losses.
Q: Can I hold contracts indefinitely?
A: Only perpetual contracts allow this. Delivery contracts expire weekly/quarterly.
Q: Is contract trading suitable for beginners?
A: High-risk. Start with low leverage and small positions.
Conclusion
Contract trading on OKX offers flexibility but demands disciplined risk management. Master margin modes, leverage, and fees to optimize strategies.
👉 Explore OKX’s contract trading tools
Disclaimer: Trading involves risks. This content is educational and not financial advice.