1. How to use Futures trading on CoinDCX?

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.

2. How to benefit from using Futures trading?

Here are some of the benefits that you can enjoy with Futures trading on CoinDCX Pro App & Web:

• Up to 15x leverage for better upside opportunities
• Low fees (Maker 0%; Taker 0.075%)  
• Trade Futures in top cryptos like BTC, ETH, DOGE, SOL & more
• User-friendly and intuitive interface
• Perpetual contracts with no expiry

3. How to open an account for Futures trading?

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. 

4. What is a USDT – M futures contract?

In USDT – M futures, users need to keep the initial margin in USDT and profit / loss is also settled in USDT.

5. What are BTC – Margin futures?

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. 

6. What are perpetual futures?

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.

7. What is leverage?

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%

8. What is a fill or kill order?

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.

9. What is a Good-Till-Cancelled order?
   
   A Good-Till-Cancelled (GTC) order is an order to buy or sell a crypto that lasts until the order is completed or cancelled. Below you can see how you can choose the option when you want to buy your favourite crypto at the price you want, and have no issues waiting to obtain that specific price.

10. What is an Immediate-Or-Cancel order?
    
    An Immediate-Or-Cancel (IOC) order is one which has to be executed immediately and fully, or as fully as possible and the non-executed parts are deleted right after. This is quite similar to the fill or kill order, with the only difference being in the fill or kill order, the entire quantity has to be filled or the order is cancelled, whereas in IOC, only the quantity that can be executed at that price is executed and the rest of the quantity is cancelled.

11. What is a market order?
    
    A market order is an option to buy or sell your crypto, no matter what the price is. When executed, this order basically fills all the opposing orders in the orderbook until the desired quantity is reached.

12. What is a limit order?
    
    A limit order is an order to buy or sell a crypto at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. Hence, a limit order is not guaranteed to be executed.

13. What is the difference between limit & market orders?
    
    The difference between the two order types is quite simple. Limit orders enable you to enter a position at a price determined by you, with no actual guarantee of execution. While market orders are those which execute upon your order immediately but the price may be different by the time your order is executed.

14. What is a stop loss?
    
    Stop loss is a price level on your investment that basically determines how much loss you are willing to take on the crypto you have bought. This can be determined in percentage terms or in terms of amount of loss, depending on the investor.

15. What is a stop loss order?
    
    A stop loss order is an order that enables you to automatically place an order in the system to cut your losses at your desired level. Stop loss orders involve a trigger price, which when crossed automatically triggers an order to be entered into the system and executes it at a predetermined price level.

16. What is liquidation?
    
    In crypto markets, liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open). Liquidation can happen in both margin and futures trading.

17. How to avoid liquidation?
    

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:

• • Stop price: The price where the stop loss order will execute
  • Sell price: The price at which you plan to sell a particular crypto asset 
  • Size: How much of a particular asset you plan to sell

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.

18. How and when to set a stop loss?

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. 

19. How to check my Orders and realized P&Ls?

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.

19. • • If you have an open position with an unrealised profit of 10 BTC, this amount will show on the Open Positions tab.
      • If you completely close the same position and you realize a profit of 10 BTC, this 10 BTC will be shown on the Closed Positions tab.
      • If you then create a new position on the same contract, realized P&L will be reset to 0 BTC on the Open Positions tab. Realized P&L resulting from a partial closure of this new position will be displayed on the Open Positions tab.
      • If you then completely close this new position, any realized P&L will be added to that symbol on the Closed Positions tab.

20. How to buy or add more positions?
    
    To buy or add more positions, you will have to simply log into your CoinDCX Pro app, go to your Positions tab, and select the pair you want to buy or add on. Tap on the Buy/Add button (image below for reference). 

21. How to sell or reduce an existing position?
    
    To sell or reduce an existing position, you will have to log into your CoinDCX Pro app, go to your Positions tab, and select the pair you want to sell or reduce. 
    • Tap on the Sell/Reduce button (image below for reference). 
    • Enter the contract amount that you want to reduce.
    • Select the order type, and swipe right to sell.

For a quick tutorial on this, click here to watch this video.

22. How to exit a position?

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).

23. How to calculate P&L on Futures contracts?
    

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