Perpetual contracts are one of the most active derivatives in the cryptocurrency exchange. It is a contract without an expiration date, allowing traders to hold positions indefinitely and trade with leverage.
Before understanding the basics of perpetual contract data, it is necessary to understand some basic terms.
1.Open Interest: Open Interest refers to the total number of outstanding contracts in the futures market. In simple terms, it is the sum of all futures contracts that traders have not yet closed. It can help us determine market liquidity and market sentiment. If Open Interest increases, it indicates that trading activity of market participants has increased, and market liquidity is relatively high. Conversely, low Open Interest indicates low market liquidity. In addition, Open Interest can also help us judge market trends because as the market price rises, Open Interest also increases, and vice versa.
2.Funding Rate: Funding Rate is a special mechanism of perpetual contracts used to maintain consistency between the perpetual contract price and the spot price. The Funding Rate is generated by the exchange of funds between long and short positions. If the Funding Rate is positive, it means that the long position needs to pay a certain fee to the short position; otherwise, it means that the short position needs to pay a certain fee to the long position. Changes in Funding Rate can help us judge market sentiment. When long positions dominate the market, the Funding Rate is usually positive, and vice versa.
3.Liquidation: Liquidation refers to the number of forced liquidations in perpetual contract trading due to insufficient margin in a particular trading account. When the market price fluctuates sharply, liquidation is easy to occur, so the liquidation volume can help us judge the degree of market risk. Generally speaking, the higher the liquidation volume, the higher the market risk. If you hold a long position, liquidation will sell your position at market price. If you hold a short position, liquidation will buy your position at market price.
4.Basis: Basis refers to the difference between the perpetual contract price and the spot price. When the Basis is positive, it means that the perpetual contract price is higher than the spot price, and vice versa. Changes in Basis can help us judge the supply and demand relationship and market risk.
5.Cumulative Volume Delta (CVD): CVD is a technical indicator used to analyze market trends. It determines the strength of market buying and selling forces and market trends by accumulating the number of market buy and sell orders.
The above are some common perpetual contract data indicators. By comprehensively using these indicators, we can better analyze market trends and participate in trading, and improve the success rate of trading.