Understanding Perpetual Futures
Learn about USDT/THBT perpetual futures - one of our trading options
Documentation
What are Perpetual Futures?
Perpetual futures are derivative contracts that allow you to speculate on the price movement of an underlying asset (in this case, the USDT/THBT exchange rate) without actually owning the asset. These contracts have no expiration date and can be held indefinitely as long as you maintain sufficient margin.
Cafe Trading offers USDT/THBT perpetual futures as one of our trading options, which are particularly useful for businesses and individuals who want to hedge against foreign exchange risk or speculate on currency movements with leverage.
Long Positions
When you go long, you're betting that the USDT/THBT rate will increase. You profit when the rate goes up and lose when it goes down.
Example:
If USDT/THBT is 35.50 and you expect it to rise, you open a long position. If it reaches 36.00, you profit from the 0.50 increase.
Short Positions
When you go short, you're betting that the USDT/THBT rate will decrease. You profit when the rate goes down and lose when it goes up.
Example:
If USDT/THBT is 35.50 and you expect it to fall, you open a short position. If it drops to 35.00, you profit from the 0.50 decrease.
Key Concepts
Leverage
Leverage allows you to control a larger position with a smaller amount of capital. Cafe Trading offers up to 100x leverage, meaning you can control 100x your margin amount.
Example:
With 10x leverage and 1,000 USDT margin, you can control a 10,000 USDT position.
Margin
Margin is the collateral you need to maintain your position. It's calculated as a percentage of your position size and varies based on your leverage.
Example:
For a 10,000 USDT position with 10x leverage, you need 1,000 USDT margin (10%).
Liquidation
If your position loses too much value and your margin ratio falls below the maintenance margin, your position will be liquidated to prevent further losses.
Warning:
Liquidation can result in the loss of your entire margin. Use stop-loss orders.
Funding Rate
The funding rate is a mechanism that keeps the perpetual futures price close to the spot price. It's paid or received every 8 hours based on your position.
Note:
Long positions pay funding when positive, short positions receive it.
Risk Management
Position Sizing
Never risk more than you can afford to lose. A common rule is to risk no more than 1-2% of your total capital on any single trade.
Position Size Calculator:
Position Size = (Account Balance × Risk Percentage) ÷ (Stop Loss Distance × Leverage)
Stop-Loss Orders
Always use stop-loss orders to limit your potential losses. Set them at a level where you're comfortable losing that amount.
Example:
If you buy at 35.50, set a stop-loss at 35.00 to limit your loss to 0.50 per unit.
Take-Profit Orders
Set take-profit orders to lock in profits when your target price is reached. This helps you avoid giving back gains due to market reversals.
Example:
If you buy at 35.50, set a take-profit at 36.00 to secure a 0.50 profit per unit.
⚠️ Important Risk Warnings
- • Perpetual futures involve substantial risk of loss
- • You may lose more than your initial investment due to leverage
- • High leverage amplifies both profits and losses
- • Market volatility can lead to rapid price movements
- • Always use proper risk management tools
- • Only trade with funds you can afford to lose
Trading Strategies
Trend Following
Follow the overall market direction. Buy when the trend is up, sell when it's down.
- • Use technical indicators (MA, RSI, MACD)
- • Identify support and resistance levels
- • Follow volume and momentum
Mean Reversion
Trade against extreme price movements, expecting prices to return to average levels.
- • Use Bollinger Bands or RSI
- • Trade at support/resistance levels
- • Set tight stop-losses
Hedging
Use futures to protect against adverse currency movements in your business or investments.
- • Offset currency risk exposure
- • Use lower leverage for stability
- • Focus on capital preservation
Scalping
Make many small trades for small profits, requiring quick execution and tight spreads.
- • Use high leverage carefully
- • Focus on liquid markets
- • Minimize transaction costs