# Introduction to Derivatives Trading

**Derivatives trading on YUBIT** allows traders to speculate on the price movements of cryptocurrencies without directly owning the underlying assets. The most popular product is the **perpetual contract**, which has no expiry date and provides opportunities to profit in both rising and falling markets.

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#### 1. What is Derivatives Trading?

Derivatives are financial contracts whose value is based on an underlying asset, such as BTC or ETH. In YUBIT’s case, this mainly refers to **perpetual contracts**, which are settled in USDT and can be held indefinitely.

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#### 2. Key Features of Derivatives Trading

1. **Leverage** – Amplify both profits and losses by controlling a larger position with smaller capital.
2. **Long & Short Positions** – Go long if you expect the price to rise, or go short if you expect the price to fall.
3. **Perpetual Contracts** – No expiry date, positions can be held as long as margin requirements are met.
4. **Funding Rate** – A mechanism that balances payments between long and short traders to keep contract prices aligned with spot markets.

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#### 3. What is Margin?

Margin is the collateral you must deposit to open and maintain positions. YUBIT supports two margin modes:

* **Cross Margin** – Margin is shared across positions, reducing the risk of forced liquidation.
* **Isolated Margin** – Margin is limited to a single position, allowing you to strictly cap potential losses.

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#### 4. What is Leverage?

Leverage allows traders to magnify their exposure. For example, using 10x leverage means a $1,000 margin deposit controls a $10,000 position. This increases both profit potential and risk of loss.
