# Contracts Basics Inventory

**Published by:** [BTC](https://paragraph.com/@btc-62/)
**Published on:** 2022-08-24
**URL:** https://paragraph.com/@btc-62/contracts-basics-inventory

## Content

1. (1) Introduction A contract transaction is an agreement between a buyer and a seller to receive a certain amount of an asset at a specified price at an agreed future time. A contract is a standardised contract between a buyer and a seller that is set by an exchange, which specifies the type of commodity, trading time, quantity and other standardised information. The contract represents the rights and obligations of the buyer and seller. In simple terms, it is an agreement to trade a certain amount of a commodity at a certain time and place in the future. Contract trading is a type of financial derivative that is traded relative to the spot market, where the user can choose to buy long or sell short contracts in order to gain the benefits of rising or falling prices by judging the ups and downs of futures contracts. (2) Classification of delivery methods Contracts can be divided into perpetual contracts and fixed-term contracts according to the delivery method. The main difference between the two is literally that fixed-term contracts have a fixed delivery date, while perpetual contracts do not. Fixed-term contracts are classified into three categories according to the time of delivery: current week contracts, next week contracts and quarterly contracts. (3) Classification of transaction types There are two categories based on the type of transaction, open and closed. Open and close positions, subdivided into two directions, buy and sell. Buy to open a long position (call) is when the user is long or bullish on the index and buys a certain number of new contracts. A "buy to open long" operation will increase the long position after a successful aggregation. A Sell Close Out (long position closing) is when the user is no longer bullish on the future index and covers the sold contract, offsetting the currently held bought contract to exit the market. A "sell to close" operation will reduce the long position after a successful aggregation. Selling short (bearish) means selling a certain number of new contracts when the user is bearish or bearish on the index. A "sell to open" operation will increase the short position after a successful aggregation. A buy to close (short position closing) is a buy contract that the user is no longer bearish on the future of the index and is hedged against the current sell contract to exit the market. A "buy to close" operation will reduce a short position after a successful aggregation. (4) Functions (1) Hedging and hedging of risk. The current contract can play two main roles for the user, to make a small profit and to hedge the risk. The principle of risk hedging is as follows. If the price of BTC rises, then the futures will lose and the amount of BTC will become less, with the total value remaining largely unchanged. If the price of BTC falls, then the futures will make a profit, the amount of BTC will become more and the total value will remain the same. ②Increasing the liquidity of the asset will facilitate the entry of more institutional investors. As many institutional investors are unable to invest in Bitcoin directly, the introduction of derivatives by the big exchanges gives such investors access to the Bitcoin market. (iii) Expanding trading options and competing for pricing power in Bitcoin. Contract trading allows virtual assets to be traded in a variety of strategies, either short or long. At the same time, the spot and contract markets will also feed into each other, increasing the volume of the overall digital currency market. The volume of derivatives traded in futures is much higher than the volume of physical gold traded. Those institutional investors who struggle to gain an edge in the spot market can counteract the spot market by dominating the derivatives market. (5) Account equity and profit and loss calculation Contract account equity. Equity in a contract account is the total equity in the contract account for that currency. Contract account equity = account balance + realized profit and loss for the week + unrealized profit and loss for the week Account Balance. The account balance is the number of currencies held by the user in the contract account, i.e. the number of currencies transferred from the coin account to the contract account. At the time of clearing, the realised gains and losses arising from the user's transactions will be added to or subtracted from this item. Unrealised P&L. Unrealised P&L is the profit or loss of the position currently held by the user and will vary with the latest trading price. Unrealised P&L on long positions = (1/average price of position - 1/latest traded price) * number of long contracts * contract face value Unrealised gain/loss on short positions = (1/ latest traded price - 1/ average price of position) * number of short contracts * contract face value 2. The content introduced above is only about the basics of cryptocurrency, which relates to whether we can make money through cryptocurrency. Cryptocurrencies make money not only by scientific methods to increase income, but also by finding ways to save money. The handling fees are small, but they must not be ignored. I have calculated that with frequent transactions and long trading hours, the accumulation of fees can add up to more than 10,000 U a year. Next I will introduce a few common ways to reduce fees on large trading platforms. (1) Lowering Binance's fees Binance is currently the world's largest digital currency exchange, and you must sign up for Binance if you want to speculate on coins. The transaction fee is deducted from the assets received. For example, if you buy Ethereum/USDT, the fee is paid in Ethereum. If you sell Ethereum/USDT, the commission is paid in USDT. Example. You place an order for 10Ethereum at a price of USD3,452.55 per share. Transaction fee = 10Ethereum0.1% = 0.01Ethereum Or you place an order to sell 10Ethereum at 3,452.55 USDT per share. Transaction fee = (10Ethereum3,452.55USDT)*0.1% = 34.5255USDT What many people do not know is that the Binance transaction fee can also be reduced. If you want to reduce your Binance trading fees, you must register using the invitation link below or use the invitation code "Q022W7SC". https://accounts.binance.com/en/register?ref=Q022W7SC(2) Reducing OKX fees OKX is a professional digital currency trading platform loved by many users, and its transaction fees can be reduced. Depending on the volume of transactions, OKX divides its users into two levels: normal and professional. Ordinary users are graded according to their OKB positions, while professional users are graded according to their trading volume and asset size. The different tiers determine the trading fees for the next trading day. When calculating the fee levels, if the coin trading volume, total trading volume of delivery and perpetual contracts (USDT delivery contract, coin-based delivery contract, USDT perpetual contract, coin-based perpetual contract), option contract trading volume, and asset volume meet the conditions of different fee levels, users will enjoy the fee discount of the highest level. First method: OKX has an official maximum savings rate of 20%. Use the link below to register with OKX and save 20% on fees. https://www.ouyi.business/join/BTC1ETH Second method: Open the OKX website and enter "BTC1ETH" in the "Invitation Code" on the registration page to see the cashback percentage: 20% at the bottom. Be sure to enter this invitation code, otherwise you can not get 20% cashback percentage. (3) Reduce FTX fees FTX is currently a very fast-growing, contract players more exchange, you must register FTX if you play the contract. if you want to reduce the FTX transaction fees, you must use the following invitation link to register. https://ftx.com/referrals#a=121031692 3, trading road is long, together with forward Want to know more about how to reduce the commission? telegram: btcethcool We have set up a community dedicated to the study of trading, add telegram friends to pull you into the community.

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