Trade Futures on CoinDCX Pro with 15X Leverage!
Crypto Futures give traders the opportunity to trade on the future price of a crypto asset without having to actually purchase or handle it. This allows traders to take positions upto 15X the assets they have, hedge against volatile markets and make the most out of current market situations through risk management and other strategies. You can conveniently trade crypto Futures using CoinDCX Pro App and Web.
For more information, click here to watch this quick video tutorial.
Here are some of the benefits that you can enjoy with Futures trading on CoinDCX Pro App & Web:
You can conveniently trade crypto Futures using CoinDCX Pro App and Web. Open an account with CoinDCX and enjoy a completely automated KYC verification system for hassle free onboarding or simply login using your existing CoinDCX credentials.
In USDT – M futures, users need to keep the initial margin in USDT and profit / loss is also settled in USDT.
In BTC – M futures, also known as inverse futures, users need to keep the initial margin in BTC and profit and loss is settled in BTC.
If you want to earn more BTC but are not sure whether to increase exposure on the long side or hedge downside, you can do so without converting the existing BTC to USDT, simply by taking a long position BTC-USDT through contract. In BTC – M futures, position gets settled in BTC itself including profits. Thus, no conversion is needed as your P&L increases in BTC itself.
Perpetual contract is a futures contract with no date of expiration. However, there is a funding rate applied every 8 hours to keep futures price pegged to spot markets; either longs pay shorts or shorts pay long depending on the gap between spot and futures. Perpetual contracts are marked according to the Last Price Marking method. The Last Price determines Unrealised P&L and liquidation prices.
In simple terms, Leverage has a multiplier effect on your profits as well as losses. If your losses exceed the amount you have deposited in your Locked Margin (L%)* account, the exchange will give you a margin call or will liquidate your positions to compensate for the losses.
To understand the potential, we will consider two scenarios for traders, one with leverage and one without leverage.
No Leverage:
Suppose you have INR 7000 or 100 USDT (assuming 1 USDT is 70 INR) which can help you buy 0.01 BTC when the price of BTC is USDT 10,000. Let’s say in a week, BTC’s price increased by 10%, currently trading at USDT 11,000. Your profit would be USDT 10.
Return on Investment (ROI) = 10/100 = 10%
Leverage:
You deposit INR 7000 in the deposit margin.
Let’s assume you have INR 7000 or 100 USDT (assuming 1 USDT is 70 INR) and you take 10x leverage, which can help you buy 0.1 BTC when the price of BTC is USDT 10,000. Let’s say in a week, BTC’s price increased by 10%, currently trading at USDT 11,000. Your profit would be USDT 100.
P&L = 10*0.01*(11,000 – 10,000) = 100 (USDT)
ROI = 100/100 = 100%
A fill or kill (FOK) order is an order that is directed to be executed immediately and fully at the market or a specified price or cancelled if not filled. This option can easily be toggled on the CoinDCX web or mobile app interface on the order window. This option is used when the user wants to enter into a position immediately at a specific price. This executes all available opposite orders with that specific price.
Liquidation is done to ensure that the leverage taken by the trader in the derivatives market doesn’t affect the market in case of a major move in the opposite direction of the trade.
When using leverage, there are a handful of options available to mitigate the chances of being liquidated. One of these options is known as a “stop loss.”
A stop-loss, otherwise known as a “stop order” or “stop-market order” is an advanced order that an investor places on a crypto exchange, instructing the exchange to sell an asset when it reaches a particular price point.
When setting up a stop loss, you will need to input:
If the market price reaches your stop price, the stop order automatically executes and sells the asset at whichever price and amount stated. If the trader feels the market could move quickly against them, they might choose to set the sell price lower than the stop price so it’s more likely to get filled (bought by another trader). The primary purpose of a stop loss is to limit potential losses.
Additionally, traders can also add more margin to avoid liquidation by tapping on the Adjust Lvg. button (image below for reference) through the CoinDCX Pro app. To learn more, click here to watch this quick video tutorial.
When it comes to margin trading, risk management is arguably the most important lesson. Your primary goal should be to keep losses at a minimum level even before thinking about profits. Therefore, you must deploy mechanisms to help you survive when the market doesn’t go as expected.
Placing stop losses correctly is very important, and while there is no golden rule for setting a stop loss, a spread of 2-5% of your trade size is often recommended. Alternatively, some traders prefer to set stop losses just below the most recent swing low (provided it’s not so low you’d stand to be liquidated before it is triggered).
Secondly, you should manage your trading size and the associated risk. The higher your leverage, the higher your chances of being liquidated. Using excessive leverage is akin to exposing your capital to unnecessary risk.
Your personal realized P&Ls and orders will be displayed on your CoinDCX dashboard.
CoinDCX dashboard has two different tabs: Open Position tab and History tab.
For a quick tutorial on this, click here to watch this video.
To exit a position, you will have to simply log into your CoinDCX Pro app, go to your Positions tab, and select the pair you want to exit.
Tap on the Exit button (image below for reference). All open and existing positions will then be closed via market order or get cancelled (for open positions).
Unrealised P&L
For a long position in a Futures contract:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
For a short position in a Futures contract:
P&L = -n*m*(Future Current Price – Future Entry Price) (in BTC
It is worth noting that your Unrealized profits and losses are adjusted from the locked margin you post. Profit on a Futures position adds to the Margin (Locked Balance). Conversely, loss is subtracted from the locked margin and you might need to top it up to continue holding your position.
Settlement price is determined at the maturity of the contract through a pre-defined method described in the contract specifications. All open positions at the time of contract maturity are closed at the settlement price.
Note: n = number of contracts ; m = contract size
Realized P&L
In case of Futures, P&L can be realized either by exiting the position in the market or via settlement process at the maturity of the contract
For a long position in a Futures contract:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
Exit long position via settlement:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
Exit short position in market:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
Exit short position via settlement:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
Note: n = number of contracts ; m = contract size
Inverse Futures
For a long position in an inverse Futures contract:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
For a short position in an inverse Futures contract:
P&L = n*m*(Future Current Price – Future Entry Price) (in BTC)
Note: n = number of contracts ; m = contract size