The underlying price of Perpetual Contract is the spot index of multiple top exchanges. For details, please refer to Index Price. All margins, profits and losses are quoted in holding currency. The contract size is described in Contract Description.。
Trader will long Perpetual Contract with the expectation that the digital currency/US dollar will rise in value. On the contrary, trader will short Perpetual Contract if his expectation is that the price will drop.
Margin and Leverage:
All margins are calculated in holding currency. You can trade in two directions (long or short) on this currency contract.
We offer 2x, 3x, 5x, 10x, 20x, 33x, 50x and 100x leverage. You can choose a leverage when opening a position, however, this leverage cannot be adjusted after opening the position. (The leverage between multiple contracts is not affected by each other.)
A trader goes long 100 BTC of BTC at a price of 6,000 USD. He is long 100 BTC * 6,000 USD = 600,000 contracts. A few days later the price of the contract increases to 7,000 USD.
Profit will be: 600,000 * 1 * (1/6,000 - 1/7,000) = 14.286 BTC
If the price had in fact dropped to 5,000 USD, the trader's loss would have been: 600,000 * 1 * (1/6,000-1/5,000) = -20 BTC. The loss is greater because of the inverse and non-linear nature of the contract.
Conversely, if the trader was short then the trader's profit would be greater if the price moved down than the loss if it moved up.
Note: The price of digital currencies can be highly volatile. With the use of leverage, the risks and opportunities in trading digital currencies are both extremely outsized. For these reasons, traders should be cautious and aware.