# Virtual Currency Contracts Tips

By [BTC](https://paragraph.com/@btc-63) · 2022-08-24

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1.  Contract trading is an agreement between a buyer and a seller to receive a certain amount of an asset at a specified price at a specified time in the future. A contract is a standardised contract between a buyer and a seller, with the exchange specifying the type of commodity, trading time, quantity and other standardised information. The contract represents the rights and obligations of the buyer and seller. Here are a few tips for trading virtual currency contracts. (1) Hedge the spot to reduce risk Hedging spot means buying spot while creating the same number of sell contracts. In this way, when the price rises, the profit from spot is just equal to the loss from the contract, and vice versa, and the price of the currency is irrelevant. By hedging spot, we can use three derivative techniques. Participating in an event while hedging risk: For example, when participating in the Coin Launchpad, in order to avoid the volatility of BNB's coin price affecting your returns, buy BNB and create a BNB shorting contract at the same time, so that you can make a good profit from the Launchpad without taking the risk of BNB. However, there are many people exploring Hank's article, and when everyone does this, the number of people shorting will increase significantly, making the shorting period costly in terms of capital costs and possibly lower returns or even losses. Cash and Futures Arbitrage: Since most people who short contracts receive a capital fee during a bull market, by buying spot with one hand and selling contracts with the other, you can regularly receive a capital fee without incurring fluctuations in the price of the currency, and there are even exchanges that specifically turn such operations into one-click execution bots. Locking in profits: When the spot price rises, the explorer is often faced with the question, "Should I sell? Will it fly?" At this point it is possible to create the same number of short contracts to ensure that you take advantage of the rise. Conversely, if the explorer has a short position that has already fallen in profit, he or she can buy the same amount of spot to lock in the profit from the short position. (2) Use features to magnify profits and losses As contract trading allows explorers to open up high leverage at low cost, if they control their risk and time their entry and exit well, they can significantly increase their profit and loss on the bid/ask spread. For example, if a 40,000 U capital buy a 40,000 U BTC and it rises to 44,000, the profit will only be 0.4 million. However, if the explorer builds a 100X leveraged contract, he will be able to buy 100 BTC contracts and make a profit of 400,000 when it rises to 44,000, i.e. the same 10% increase in BTC, the explorer can get a 1000% payout through contract trading. Of course, the premise is that the explorer can ensure that BTC will not fall below 39,600, because when the price of BTC is lower than 39,600, the explorer's 40,000 capital will not be enough to cover the loss of (4-3.96)\*100=4, it will burst, and the capital invested will be completely gone! (3) Market Neutral Trading Strategy A market neutral trading strategy is to short currency A and long currency B at the same time, so as to offset systemic risk and focus on profiting from the relative value of A and B. The price of a currency is like a spinning coffee cup in an amusement park, there will be a big wheel and a small wheel. When the big wheel spins, each cup is affected, but the cup itself still has its own turn. If you want to avoid the influence of the big wheel (systemic risk) on your profits, you just need to turn one hand with the wheel and the other hand against it, so that the influence of the big wheel disappears. If B happens to rise sharply against A, the explorer will be able to make money by shorting A and going long on B at the same time, i.e. a market neutral trading strategy, regardless of how the market turns up or down. However, it is important to note that market neutral trading strategies must be carefully chosen between the so-called A and B currencies, because if the rise and fall of A and B are similar, then shorting A and going long B at the same time will not result in any profit, and may even result in a loss due to the commission paid. (4) Sell before you buy, you can make money even if you fall If the price of the currency is on a downward trend and you want to make money through spot trading, you can only "borrow coins to sell" and then buy them back after they have fallen, the principle of operation and transaction costs are relatively high, please refer to the introduction of Cryptocurrency Leveraged Trading for more details. However, through perpetual contract trading, it is easy to sell and then buy. Since the transaction is not a physical commodity, explorers can buy or sell any cryptocurrency contract they want as long as they have the margin, they no longer need to hold the commodity or borrow it first, and naturally, there is no borrowing rate. For example, if an explorer believes that BTC will fall to 20,000U in the future, he can create a 40,000U "sell" contract while it is now at 40,000U, and then buy and close the position with 20,000U when it really falls to 20,000U.
    
2.  The above information is only about the basics of cryptocurrency, which is related to whether we can make money through cryptocurrency. In addition to increasing your income by scientific methods, cryptocurrency money making is also about 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 = 10Ethereum_0.1% = 0.01Ethereum Or you place an order to sell 10Ethereum at 3,452.55 USDT per share. Transaction fee = (10Ethereum_3,452.55USDT)\*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 use the invitation link below or use the invitation code "Q022W7SC" to register. [https://accounts.binance.com/en/register?ref=Q022W7SC](https://accounts.binance.com/en/register?ref=Q022W7SC)
    

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(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](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](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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*Originally published on [BTC](https://paragraph.com/@btc-63/virtual-currency-contracts-tips)*