Why can’t perpetual contracts be closed (why should perpetual contracts have a take-profit)?

Why can’t perpetual contracts be closed? Editor’s note: This article is from Chengpishu (ID: chengpishu), author: orangefans, published with permission from Planet Daily.

Perpetual contracts cannot be closed because leverage is inevitable in the spot market. When you trade, you need to ensure that your funds are not affected by losses or risks. If you don’t do this, there will be no profit. If you have such a situation, your funds will be affected or the risk will be reduced, which means that you can use all profits for short positions and liquidation positions, resulting in the inability to continue your investment. Therefore, in order to obtain maximum returns from this volatile market, some measures must be taken, including:

1. Exchange one currency for one US dollar and lend out 1 US dollar in the market, selling it to others. Then your principal will be liquidated. This is an automated clearing and settlement system, which means that once your account is settled, it will lose all its value and you cannot repay it at any time without interest, so you can only buy the currency at a price between 0 and zero.

2. Transfer assets to an exchange, then withdraw and deposit them into the platform to earn fee income. Of course, this is a very inefficient practice, but it is also a very safe one. After all, in the current field of digital currencies, we often hear a popular term called “futures contract”. This encrypted derivative is similar to traditional financial products and has a high slippage situation. However, in the case of large price fluctuations in mainstream digital currencies such as Bitcoin and Ethereum, due to the lack of stability, its trading efficiency is relatively low, especially in extreme volatility situations. For example, during the bull market cycle of Bitcoin, investors often take this opportunity to purchase more BTC and ETH and other virtual tokens for arbitrage. Not to mention other currencies, they are usually priced in USDT, and these currencies are often based on fiat currency exchanges. Some projects have also launched corresponding discounts and promotions for their digital currencies. However, with the development of time, more and more institutions are willing to provide various services and more innovative gameplay for their users.

3. Use leverage to participate in perpetual contracts. Why can’t perpetual contracts be closed? Because perpetual contracts are a completely transparent financial instrument, in any case, they can make decisions according to customer needs and meet specific needs of users. It will never have a bursting event. In order to reduce the liquidation rate and risk tolerance when a black swan event occurs, perpetual contracts allow holders to provide margin to counterparties. At the same time, to protect their property rights, some conditions can also be set, such as being able to benchmark other contract targets without a stop loss, that is, being able to choose to support the spot market of the targeted spot. If in perpetual contracts,

Why should perpetual contracts have a take-profit?

In the futures market, we often encounter a problem: why have a take-profit?

First is profit. For most people, losses do not mean gains. For example, when shorting or buying call options, there are often disastrous losses (such as when the market is falling), which is very serious because there is no capital support, so losses will not occur that quickly, and even profits are difficult to achieve. This is one of the factors that lead to profit. If this result is unexpected, it will have a psychological impact on many people.

Second is risk management. Many times, traders choose to close positions in order to earn more money without increasing investment capital or losses. Therefore, these are strategies that cannot control their own interests. But once there is a liquidation, investors should realize that they have been cut off for a week before they start a new round of operations, which is called “plunge”. In this way, even if you have a large amount of Bitcoin, there is not enough asset support, and it is basically just a short-term income. (This is a joke)