The 2024 Bitcoin halving has set the stage for a powerful bull market — and recent global events have only accelerated momentum. With increased institutional support and growing mainstream adoption, digital assets are gaining unprecedented traction. Bitcoin, the flagship cryptocurrency, has surged past key resistance levels, climbing from around $67,618 to over $100,000 in a matter of weeks. As Bitcoin leads the charge, altcoins — all cryptocurrencies other than Bitcoin — are also experiencing significant gains. Notably, meme coins like DOGE have seen dramatic rallies, driven by social sentiment and high-profile endorsements.
For investors who didn’t buy early, missing the initial surge doesn’t mean missing out entirely. There’s still opportunity — especially through cryptocurrency perpetual contracts, a popular derivatives instrument that allows traders to profit from both rising and falling markets. But before diving in, it’s essential to understand how perpetual contracts work, how to use them safely, and how to execute trades effectively on an exchange.
This guide walks you through everything you need to know about starting with perpetual contracts — from account setup to placing your first trade — with clear, actionable steps.
Preparing to Trade Perpetual Contracts
Step 1: Choose and Set Up a Cryptocurrency Exchange Account
Perpetual contracts are offered exclusively on centralized cryptocurrency exchanges (CEXs). To get started, you’ll need an account on a reputable platform that supports derivatives trading. Most major exchanges require KYC (Know Your Customer) verification to unlock full trading capabilities, including margin and futures functions.
When selecting an exchange, consider these three types:
- High-liquidity exchanges: These platforms offer tight spreads and deep order books for major assets like BTC and ETH.
- Altcoin-focused exchanges: Some platforms list perpetual contracts for smaller-cap tokens not available elsewhere.
- Local compliant exchanges: If you're using fiat like TWD, choose a regulated domestic exchange for seamless deposits and withdrawals.
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Having multiple accounts across different exchanges gives you flexibility in accessing diverse markets and managing risk more effectively. However, always prioritize security and regulatory compliance.
Step 2: Deposit Funds Using Stablecoins
Since most derivatives exchanges don’t accept direct fiat deposits, you’ll need to convert your local currency into a stablecoin such as USDT (Tether) or USDC (USD Coin). These digital assets maintain a 1:1 peg to the U.S. dollar, making them ideal for trading without exposure to extreme volatility.
Here’s how:
- Buy USDT on a local exchange using TWD.
- Withdraw USDT to your chosen international exchange via blockchain transfer.
- Ensure both sending and receiving platforms use the same network (e.g., ERC-20, TRC-20, or BEP-20).
⚠️ Critical Reminder: Always double-check the network type. Mismatched networks can result in permanent fund loss.
Once transferred, monitor the transaction status through a blockchain explorer until confirmed. Processing time and fees vary by network — TRC-20 is often faster and cheaper than ERC-20.
Step 3: Transfer Funds to Your Contract Account
After USDT arrives in your exchange wallet, it will initially reside in your spot account (also called "funding account"). To trade perpetuals, you must manually transfer funds to your derivatives account.
This process is straightforward:
- Navigate to “Assets” > “Fund Transfer”
- Select USDT as the currency
- Choose “From: Spot Account” to “To: Contract Account”
- Enter the amount and confirm
Your funds are now ready for perpetual contract trading.
How to Open a Perpetual Contract Trade
Step 1: Understand Contract Types
On most exchanges, you’ll see three main contract types:
- USDT-margined: Priced and settled in USDT. Ideal for beginners.
- USDC-margined: Similar to USDT but uses USDC as collateral.
- Coin-margined (Inverse): Settled in the base cryptocurrency (e.g., BTC).
For this guide, we focus on USDT-margined perpetual contracts, which simplify profit/loss calculations and reduce complexity for new traders.
💡 Pro Tip: Avoid coin-margined contracts as a beginner. While they allow earning in crypto, losses also come in crypto — potentially wiping out long-held holdings during liquidation.
Step 2: Configure Your Trade Settings
Navigate to the “Contracts” section and select “BTCUSDT Perpetual” or another asset like ADA. Verify that:
- The trading pair displays “USDT”
- The unit of measurement is USDT
Now examine key data points:
- Last Price: Current market price
- Index Price: Average price across top exchanges
- Mark Price: Used to prevent manipulation; determines liquidation and settlement
Key Concept: Funding Rate
Funding rates balance long vs. short positions. Every 8 hours:
- If longs > shorts → Longs pay shorts
- If shorts > longs → Shorts pay longs
Example: With a 0.011% rate and a $1,000 long position, you’d pay $11 every 8 hours.
High positive rates suggest strong bullish sentiment — proceed cautiously.
Step 3: Choose Isolated or Cross Margin
Each trade operates within a position mode:
- Isolated Margin: Risk limited to allocated capital. A $100 position risks only $100.
- Cross Margin: Uses entire account balance as collateral. Increases survival during drawdowns but risks total loss.
Beginners should use isolated margin to control risk exposure.
Step 4: Set Leverage
Leverage amplifies both gains and losses. A 3x leverage means every $1 controls $3 worth of assets.
Higher leverage (e.g., 10x–50x) increases liquidation risk — especially during volatile "wicks" or sudden price spikes.
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Step 5: Place Your Order
Choose from three order types:
- Limit Order: Set your desired entry price
- Market Order: Execute immediately at current price
- Stop-Limit/Stop-Market: For stop-loss or take-profit setups
For beginners, limit orders offer better control. You can also use “opponent price” to match the best available bid/ask.
Finally:
- Click “Buy/Long” if expecting price increase
- Click “Sell/Short” if anticipating decline
Your perpetual contract is now active.
Frequently Asked Questions (FAQ)
Q: What happens when I get liquidated?
A: Liquidation occurs when losses exceed your margin. The system automatically closes your position to prevent further debt.
Q: Can I lose more than I deposit?
A: No — most exchanges use clawback protection. Your maximum loss equals your margin under normal conditions.
Q: How often is funding paid?
A: Typically every 8 hours (at 00:00 UTC, 08:00 UTC, 16:00 UTC).
Q: Should I hold perpetual contracts long-term?
A: Not recommended due to recurring funding fees. Use them for tactical trades instead.
Q: What’s the difference between mark price and last price?
A: Last price is real-time trade data; mark price prevents manipulation by averaging index values.
Q: Can I adjust leverage after opening a position?
A: Yes — most platforms allow dynamic leverage adjustment while maintaining isolated margin settings.
Final Tips for Safe Trading
Perpetual contracts offer powerful tools for amplifying returns — but come with elevated risk. Always:
- Start small and practice with test amounts
- Use stop-loss orders religiously
- Monitor funding rates before entering long positions
- Never trade with money you can’t afford to lose
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Remember: Success in crypto trading isn’t about catching every move — it’s about consistent risk management, discipline, and continuous learning.
This article does not constitute financial advice. Cryptocurrency trading involves substantial risk. Conduct your own research before making any investment decisions.