What is a reverse permanent contract?
Reverse contract, also known as monetary contract. The corresponding target products are used for opening positions and final delivery. For example, if you want to go long or short BTC(ETH, etc.). ), you need to charge BTC(ETH, etc.). ) into the contract account, the final loss or gain will also be settled by BTCETH. Traders need to confirm how much the transaction is, and then calculate the margin and profit and loss in the functional currency (such as BTC and ETH). If traders want to do bitcoin contract transactions, they must use bitcoin as the bookkeeping base currency. If it is an Ethereum contract transaction, he needs to hold Ethereum. The advantages of reverse permanent contracts are as follows:
1. Suitable for Long: As the pricing unit and settlement unit are different, take /USDT as an example. When BTC makes multiple orders for BTC as a deposit, if it finally earns BTC, the actual income will be more because of the price increase. If BTC finally falls, the actual income loss will be more due to falling prices. When you use BTC as a margin for short orders, whether you finally earn BTC or lose BTC, the actual income will be damaged by the price drop. Therefore, the monetary standard is more suitable for doing more in the bull market.
2. Suitable for hoarding money: hoarders don't think much about asset prices, and they can make money whether they are long or short, which is suitable for hoarders who are optimistic about currency prices for a long time.
Take Bybit's reverse perpetual contract as an example. The quotation is in USD, but all gains and losses will be calculated in the currency corresponding to the contract (BTC/ Swiss Federal Institute of Technology /XRP/EOS). The value of each contract is $ 1. The quotation of permanent contracts is designed in this way, which is convenient for traders to trade contracts at the lowest price of 1 USD instead of 0.0000xxBTC.
Multi-warehouse profit and loss = contract quantity x( 1/ entry price-1/ exit price)
Take Bybit's BTCUSD reverse perpetual contract as an example.
If a trader buys 10000 contracts for $8000, it is actually selling 10000 and buying BTC( 10000/8000) with the same value, that is, 1.25 BTC.
Suppose the trader decides to close all positions at the price of 12500 USD, which means that he repurchases contracts worth 10000 USD and sells BTC with the same value (10000/12500), which is equivalent to 0.8 BTCs.
Multi-warehouse profit and loss = quoted currency at the time of entry-quoted currency at the time of exit =1.25btc-0.8btc = 0.45btc.