This guide explains how contract pairs work in futures trading and how to interpret them when trading on LeveX.
What Are Contract Pairs?
Contract pairs in futures trading represent the relationship between two cryptocurrencies or assets. Every futures contract on LeveX consists of a base currency and a quote currency, forming a trading pair that determines how the contract is priced and settled.
The base currency is the cryptocurrency you're speculating on, while the quote currency is what the price is denominated in. For example, in the BTC-USDT perpetual contract, Bitcoin (BTC) is the base currency and Tether (USDT) is the quote currency. The contract price shows how many USDT are needed to equal one Bitcoin.
Understanding contract pairs is essential for calculating position sizes, profits, losses, and margin requirements. Different pair types also affect how your positions are settled and what currency you'll receive profits in.
How Contract Pairs Work on LeveX
LeveX offers several types of contract pairs, each with distinct characteristics that affect your trading experience:
USDT-Margined Contracts
USDT-margined perpetual contracts are settled in Tether (USDT), making them straightforward for traders familiar with dollar-denominated trading. When you trade BTC-USDT perpetuals, your margin, profits, and losses are all calculated in USDT.
For example, if you open a long position on BTC-USDT at $50,000 and Bitcoin rises to $55,000, your profit is calculated as the price difference ($5,000) multiplied by your position size, paid out in USDT. This makes it easy to track your performance in familiar dollar terms.
USDC-Margined Contracts
USDC-margined contracts function similarly to USDT contracts but use USD Coin as the settlement currency. These contracts appeal to traders who prefer USDC over USDT or want to diversify their stablecoin exposure while maintaining dollar-denominated positions.
Coin-Margined Contracts
Coin-margined perpetual contracts use the base cryptocurrency itself for margin and settlement. In a BTC-USD coin-margined contract, your margin, profits, and losses are all denominated in Bitcoin rather than a stablecoin.
This creates different dynamics compared to USDT-margined contracts. When Bitcoin's price rises, your profits are paid in Bitcoin, but the purchasing power of those Bitcoin profits in dollar terms is also affected by Bitcoin's price movement. This can be advantageous for traders looking to accumulate more of the underlying cryptocurrency.
Contract Sizes and Position Calculation
Each contract pair on LeveX has a specific contract size that determines how much of the underlying asset each contract represents. Understanding contract sizes is crucial for proper position sizing and risk management.
Standard Contract Sizes
For most cryptocurrency pairs on LeveX, one contract typically represents a specific amount of the base currency. For Bitcoin perpetuals, one contract usually represents 0.001 BTC, while for other cryptocurrencies, the contract size may vary based on the asset's typical trading volumes and price levels.
Calculating Position Value
To calculate your total position value, multiply the number of contracts by the contract size and the current price. For example, if you're trading 10 contracts of BTC-USDT perpetuals:
- Contract size: 0.001 BTC per contract
- Number of contracts: 10
- Total position: 0.01 BTC
- If Bitcoin price is $50,000: Position value = 0.01 × $50,000 = $500
This calculation helps you understand your exposure and ensure your position size aligns with your risk management strategy.
Margin Requirements and Leverage
Different contract pairs may have varying margin requirements and maximum leverage levels. The margin requirement determines how much capital you need to open a position, while leverage amplifies your exposure to price movements.
Higher leverage means lower margin requirements but increased liquidation risk. You can view current leverage limits for different pairs on LeveX's trading data page, which shows specifications for each available contract.
Funding Rates and Contract Pairs
Funding rates apply differently depending on the contract pair type. For USDT and USDC-margined contracts, funding rates are typically paid in the respective stablecoin. For coin-margined contracts, funding payments are made in the base cryptocurrency.
Understanding how funding rates work for your chosen contract pair is important because these periodic payments can significantly impact your profitability, especially for longer-term positions. The funding mechanism helps keep the perpetual contract price closely aligned with the underlying spot market price.
Choosing the Right Contract Pair
The choice between different contract pair types depends on your trading goals and preferences:
When to Use USDT-Margined Contracts
USDT-margined contracts are ideal when you want straightforward dollar-denominated exposure without currency conversion complexity. They're particularly suitable for traders who think in dollar terms and want to easily calculate profits and losses in a familiar currency.
When to Use Coin-Margined Contracts
Coin-margined contracts work well when you want to accumulate more of the underlying cryptocurrency or when you believe the base currency will outperform the dollar long-term. These contracts can be more complex but offer unique benefits for cryptocurrency accumulation strategies.
Risk Considerations
Different contract pairs carry varying risk profiles. USDT and USDC-margined contracts provide more predictable profit and loss calculations, while coin-margined contracts introduce additional complexity through the dual exposure to both price direction and the base currency's value.
Consider your experience level, trading goals, and risk tolerance when selecting contract pairs. Beginners often find USDT-margined contracts easier to understand and manage, while experienced traders might utilize coin-margined contracts for specific strategic purposes.
Practical Trading Examples
Example 1: USDT-Margined Position
If you expect Bitcoin to rise and open a long position on BTC-USDT perpetuals with 10x leverage:
- Position size: $1,000 (controls $10,000 worth of Bitcoin)
- If Bitcoin rises 5%, your position gains $500
- Profit paid in USDT
Example 2: Coin-Margined Position
Opening a similar position on BTC-USD coin-margined contracts:
- Position denominated in Bitcoin contracts
- Profits paid in Bitcoin
- Performance affected by both directional movement and Bitcoin's dollar value
Getting Started with Contract Pairs
Before trading different contract pairs, familiarize yourself with their specifications on the respective trading pages. Start with smaller position sizes to understand how different contract types behave in various market conditions.
Review the LeveX fee structure as different contract types may have varying fee schedules. Understanding these differences helps you choose the most cost-effective approach for your trading style.
For step-by-step guidance on opening positions, refer to the guide on how to open a futures trading position on LeveX.
Final Notes on LeveX Contract Pairs
Contract pairs form the foundation of futures trading on LeveX, determining how your positions are priced, settled, and managed. Whether you choose USDT-margined, USDC-margined, or coin-margined contracts depends on your trading objectives and risk preferences.
Understanding the mechanics of different contract pairs enables better trading decisions and more effective risk management. Take time to familiarize yourself with each type before committing significant capital to any futures trading strategy.
For additional educational resources about futures trading concepts, visit the LeveX Support Center or explore related guides in the LeveX Blog.