While spot trading involves directly buying and holding cryptocurrencies like Bitcoin, there are other types of trading assets that let you profit from price movements without owning the actual cryptocurrency. These assets allow you to essentially make a bet on whether you believe the price will go up (going "long") or down (going "short").
When you trade a perpetual contract on JuCoin, you're essentially entering into an agreement with a counterparty who takes the opposite position. If you open a long position betting that Bitcoin's price will rise, someone else is taking a short position betting it will fall. When either party closes their position, they either pay the difference in price as a loss or receive it as profit.
For example:
If you open a 100,000 USDT-worth long BTCUSDT contract position when Bitcoin is priced at 100,000 USDT, it's similar to owning one Bitcoin and betting the price will rise. If Bitcoin's price increases to 110,000 USDT and you close your position, you'll receive 10,000 USDT in profit. Conversely, the person who took the short position in this scenario would be down 10,000 USDT.
What makes perpetual contracts particularly attractive is leverage. JuCoin allows you to control a larger position size than your initial investment.
For example:
To open that same 100,000 USDT position, you could start with just 10,000 USDT as margin and use 10x leverage. This means if Bitcoin rises to 110,000 USDT, you'd still make 10,000 USDT in profit despite only putting up 10,000 USDT initially.
However, while holding a spot Bitcoin means the price needs to go to zero for you to lose everything, with 10x leverage you would be liquidated if the price moves against you by just some percentage. The higher the leverage, the smaller the price movement against you needed to trigger liquidation. To learn more about how liquidation works, see our guide on What is Liquidation?
Because perpetual contracts can be held indefinitely, they use a mechanism called funding rates to keep their price aligned with the actual cryptocurrency price. Think of funding rates as a balancing system. When most traders are betting the price will go up (going long), they pay a small fee to those betting the price will go down (going short), and vice versa. This helps keep perpetual contract prices closely tied to the actual cryptocurrency price.
To get started with perpetual contract trading on JuCoin, check our step-by-step guide on opening your first perpetual contract (derivatives) position.