Phemex Perpetual Contract
A Perpetual Contract is a derivative product that is similar to a traditional Futures Contract (an agreement to buy or sell a commodity at a predetermined price at a specified time in the future), but with one main difference: contrary to Futures, Perpetual Contracts do not have an expiry date, so you can hold a position for as long as you like. In addition, perpetual contracts mimic the margin-based spot market and hence trade close to the Index Price. This allows you to amplify the outcome of the deal, but it also means that a decrease in the price of a commodity equal to your initial margin (the percentage of the total Funds you provided as a collateral) will automatically liquidate your equity and close your position.
BTC Perpetual contracts and USD Perpetual contracts.
At Phemex, users can use two different base currencies to trade all contracts. For contracts based on BTC, each contract is worth 1 USD of Bitcoin (1USD/current BTC price). Profits and Losses are calculated in terms of the contract's BTC value. Profits are equal to the difference between the contract’s value at Open Price (1USD/Open BTC price) and the contract’s value at Close Price (1USD/Close BTC price), times the Quantity. Losses are equal to the difference between the contract’s value at Close Price (1USD/Close BTC price) and the contract’s value at Open Price (1USD/Open BTC price), times the Quantity. Both functions are nonlinear, meaning that both do not have a constant rate of change. For USD based contracts, instead, the value of each contract is not predetermined. For instance, in ETHUSD contracts, each contract is worth the equivalent of 0.005 ETH, and for XRPUSD, each contract is worth the equivalent of 5 XRP. Profits and Losses are calculated based on the value of the contract in USD: both equal the difference between Close Price and Open Price, times the Quantity. Both functions evolve in a linear manner, having constant rates of change.
How to Start Trading Contracts
First you must transfer funds into the corresponding contract account. Different contract accounts support different asset types. For example, a BTC contract account needs BTC to be transferred from your spot account. Since Phemex does not currently support USD deposits, to transfer into a USD contract account you must first convert assets into USD in your spot account. After funds are transferred from spot account to contract account, you can begin to trade contracts.
