Kwenta is a decentralized exchange that allows for trading without the need for web2 credentials & uses an aggregate price feed which reduces the risk of liquidations from temporary wicks. Following this guide, traders can open/close and manage positions on the Kwenta Mobile interface like pros!
If you do not have a wallet yet, you can download and use MetaMask on most mobile devices.
Perpetual Futures are deployed and accessible on the layer 2 scaling solution Optimism. While most wallets come with out-of-the-box support for Optimism, if yours does not, you can add the required network as a custom network by using these details.
After you have a wallet, you can connect your wallet by pressing the "Connect Wallet" button on the Kwenta dashboard:
Perpetual markets on Kwenta are all isolated. This means that sUSD needs to be deposited into each available market to open a position in the selected market & withdrawn when a trade is complete to use these funds into another market.
Selecting any of the available assets under “Futures Markets” will bring you to the selected assets trade panel. Deposit any amount of margin you wish to begin trading with. Click on "Long" or "Short" depending on which side you would like to open a leverage position on.
After selecting your side, key in the amount you want to pay and the leverage you want to use; in the below example, 10 XAG (silver) is worth 202.612 sUSD is being used to buy a 2.02x XAG (Silver) long position. Hit “Open Position.”
In the Confirm order modal, you can verify trade information in this case, the "Entry Price" is $20.26, and the Liquidation Price is $10.46. The trading fee to open a position and close depends on the market and the current dynamic fee in effect. Below these stats, you’ll find the “Confirm Order” button to bring up a metamask prompt to execute the trade.
There is a "Funding fee" that is continuously deducted or credited during the life of the open position.
After opening a trade, you can view its details in the “open Positions” list, you can also click on "Account" to deposit or withdraw collateral, this allows you to manage your leverage and liquidation price outside of reducing the position itself.
The amount of profit and loss you make will be proportional to your position size. In this example, 202.612 USD has been used to buy 10 XAG. If the price of XAG increases by $2, the position would have a profit of $20.00 USD, if the price of XAG decreases by $2, the position would have a loss of $20.00 USD.
If a short position were opened instead, then if the price of ETH decreased the opposite for the hypothetical gains and losses would apply.
You can close a position partially by opening a position in the opposite direction of the existing trade or completely by clicking on the "Close" button.
Futures traders can be forced to exit positions when their losses bring their margin balance equal to their maintenance margin requirements. When this happens inevitably trades are liquidated.
Futures require a mechanism to incentivize the market skew to remain balanced (equal long/short open interest). Funding is designed to incentivize a balance of open interest on each side of the market. Positions on the crowded side of the market will be charged funding, while positions on the noncrowded side will receive funding. Funding rates can have unfavorable effects on a trader’s position. For instance, funding rates may spike when the market is consistently moving in the same direction, making it costly for traders to hold onto their positions.
Becoming familiar with the basics of futures is a must. Futures trading can be lucrative if you apply risk management to avoid non-proportional losses. Traders should strategize and do research before trading futures and understand both their advantages as well as their risks.
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To trade synthetic assets and futures, visit Kwenta.