OKX cryptocurrency derivatives
OKX cryptocurrency derivatives trading platform has been operating since 2013 and was previously based in Hong Kong. It is now based in Malta, according to information provided to us directly by the exchange. The fact that OKX is a worldwide exchange is its "road to fame." Spot trading (traditional trading) and derivatives trading are both available here.
OKX cryptocurrency derivatives trading platform also claims to be the largest cryptocurrency spot and futures exchange in the world.
OKX crypto derivatives trading platform history
OKX Crypto Exchange is a Hong Kong project that was registered back in 2014. The basis of the current OKX project can be considered a long-standing company OKCoin, registered in California, whose CEO is Star Xu - he is also the creator of the current OKX exchange (Twitter).
At the time, the U.S. was actively promoting a policy of banning Blockchain projects that sell futures on cryptocurrencies in their country. This completely contradicted OKCoin's plans, which is why it was forced to switch to a new platform in a new jurisdiction.
The result of this event was the birth of the new exchange OKX in Hong Kong, where the laws are not as strict for the cryptocurrency business.
Later, the OKX exchange was moved from under the jurisdiction of China to Malta (offshore zone), where the cryptocurrency community is quite positive.
What functionality is available on OKX derivatives trading platform?
OKX is a multi-currency exchange that allows users to exchange and speculate in cryptocurrency, tokens, fiat money, as well as engage in margin trading in futures on digital assets.
OKX is currently ranked 2nd among the top 3 best cryptocurrency exchanges for the highest daily sales volume of digital assets (over $850,000).
It is also the main competitor of the well-known trading platforms Binance and Huobi, which also claim the primacy.
OKX is primarily designed for experienced traders who are actively engaged in margin trading in cryptocurrencies. In confirmation of this is the fact that the functionality of this site is very extensive. Users have access to more than 500 currency pairs, which are traded with such cryptocurrencies as Bitcoin (BTC), Tether (USDT), Ethereum (ETH) and OKB - the internal token of the exchange OKX.
There is also an opportunity to trade in fiat money, but you can only enter the trading floor in Chinese yuan (the entry of USD is only in the plans of the developers).
OKX crypto derivatives trading is done with a leverage of 1:10 or 1:20.
Another feature of OKX is an optional verification, which in principle pleases many users who value anonymity (but now there are some nuances to the withdrawal of cryptocurrency).
The commission on this trading platform is calculated by the principle "Maker-Taker", where "Maker" - the user who creates a new order, and "Taker" - the one who satisfies an already created order (we will talk about commissions in more detail in a separate paragraph).
At the moment OKX supports 20 languages, the main ones are Chinese and English.
At the time of this publication, OKX has 331 digital assets in 534 trading pairs.
The most popular cryptocurrencies are available for instant buying and selling without having to open charts or a full OKX derivatives trading interface. These include:
- Bitcoin (BTC);
- Ethereum (ETH);
- Tether (USDT);
- Litecoin (LTC);
- Ripple (XRP);
- Bitcoin Cash (BCH);
- Dogecoin (DOGE);
- Cardano (ADA);
- Polkadot (DOT);
- Polygon (MATIC).
Types of OKX cryptocurrency derivatives in the UAE
Crypto derivatives are secondary contracts or financial instruments whose value is determined by the underlying asset. For example BTC, ETH or other assets.
Future is simply a contract or agreement between two parties to buy and sell BTC at a given price at a specific date in the future (hence the name).
However, neither party is required to actually own the underlying asset, in this case bitcoin. Instead, they simply settle the contract in U.S. dollars or with stabelcoins such as USDT.
What distinguishes futures contracts from other derivatives is the specific settlement date.
How to invest in bitcoin futures?
Let's look at an example of someone trading bitcoin futures. One of the first things a trader will have to decide is the length of the contract. Exchanges offer several options such as weekly, bi-weekly, quarterly, etc.
Let's say you want to trade weekly BTC contracts and each contract is worth $1 when the price is 1 BTC = $50,000. This means that you will need 50,000 contracts to open a position worth 1 BTC. At this point, a trader can open a long position (a bid to increase the price) or a short position (a bid to decrease the price). Whichever direction you choose, the exchange will essentially pick you up someone going in the opposite direction when you open the position. After a week, when the contracts should be settled, one of the traders will have to pay the other. If you decide to open a short position and a week later the price falls, you will make a profit. If the price went up, you will incur a loss.
What is the difference between a forward and a futures? Only futures are traded on the exchange, and forwards are off-exchange contracts.
Bitcoin options are also derivative contracts that follow the price of bitcoins, except that they do not necessarily settle on an expiration date.
The reason they are called options is because they give traders the ability or right to buy or sell at predetermined prices at certain dates in the future.
How do I trade bitcoin options?
The basics of options: call and put.
If we use the same example as above, replacing futures with options, the following key details have to change.
With options, you don't open a long or short position, instead you have "call" and "put" options.
A call option gives its holder the right to buy bitcoin at an agreed price after the contract expires.
Conversely, a put option gives its owner the right to sell.
In either case, it is entirely up to the owner to decide whether or not to exercise his right.
What are open-ended swaps / cryptocurrency contracts?
Perpetual bitcoin contracts are derivatives which, unlike futures or options, do not have an expiration or settlement date.
Traders can hold their positions open as long as they wish under certain conditions.
One of them is that there must be a minimum amount of BTC on the account (margin).
Another important factor to consider is the amount of funding.
This is a unique mechanism that helps tie the price of a perpetual contract to the price of Bitcoin.
Because of time constraints, the price of a futures contract will always be the same as the price of the underlying asset at the time of expiration. Since perpetual contracts do not expire, their prices can begin to deviate significantly from the Bitcoin price.
The solution to this problem is for one side of the traders to pay the other side.
How do you trade with a perpetual contract?
For example, if too many traders have long positions and the price of BTC open-ended contracts rises excessively above the BTC spot price, people will have no incentive to open short positions.
This scenario would lead to a positive funding rate. When the funding rate is positive, all long positions must be paid short.
When the funding rate is negative, short positions pay for long positions. This payment helps incentivize traders to close long positions and possibly open short positions, causing the price to fall back to the actual market price of Bitcoin.
By the way: To be clear, this payment is made directly between traders. Exchanges do not collect any cash payments.
How to start trading OKX crypto derivatives in the UAE?
To start trading OKX derivatives in the UAE you need to register an account on OKX exchange.
You can use your cell phone number or email address to sign up to OKX. You can also sign in using your Telegram and Google accounts. After registering your account, you will be asked to set up two-factor authentication.
Verification on the OKX
There are four levels of verification available on OKX.
Higher levels give you access to additional features and higher withdrawal limits.
Unverified. Users without verification can withdraw a limited amount of funds and cannot buy cryptocurrency for traditional currency.
Level 1. Basic verification requires basic information about the user. At this level, you can withdraw up to 200 BTC per day and buy cryptocurrency for traditional currency.
Level 2. It is necessary to provide an identity document and take a photo. The limit increases up to 500 BTC per day.
Level 3. Requires acceptance of an additional agreement. Allows you to increase the limit for peer-to-peer trading.
The OKX support team is available around the clock through the website, email, and social media accounts. In addition, you will find an extensive collection of articles on how to use the exchange's tools on the website.
As OKX is rightfully considered one of the leading cryptocurrency exchanges because it provides advanced tools and low commissions at the same time, we definitely suggest to try it!