Crypto contracts allow traders to profit from price movements without owning the underlying asset. But how much exactly do you earn per point movement? This comprehensive guide breaks down the calculation methods for different contract types.
Understanding Crypto Contracts
Cryptocurrency contracts are financial instruments traded on derivatives exchanges. They come in three primary forms:
- Futures Contracts
Agreements to buy/sell assets at predetermined future prices. - CFDs (Contract for Difference)
Cash-settled contracts mirroring spot price movements. - Options Contracts
Rights (not obligations) to trade assets at set prices before expiration dates.
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Calculating Earnings Per Point
Futures Contracts Example
- Contract Size: 1 BTC
- Tick Size: $1
- Value per Tick: 1 BTC × $1 = **$1 profit per point**
| Variable | Impact on Earnings |
|---|---|
| Larger Size | Higher $ value per point |
| Smaller Ticks | More precision in profit booking |
CFD Contracts Example
Using the same parameters as futures:
- Each 1-point BTC price movement = $1 profit
💡 Pro Tip: Always check your exchange's contract specifications—some platforms use 0.01 BTC standard sizes.
Factors Affecting Earnings
Contract Specifications
- Base currency (BTC vs. USDT margined)
- Minimum price increments
- Leverage Multipliers
While leverage amplifies profits, it doesn't change the base point value—only your exposure. - Position Direction
Long positions profit from upward moves; shorts gain when prices decline.
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FAQs
Q: How is point value different from pip value?
A: Points refer to minimum price movements, while pips typically represent percentage moves (common in forex).
Q: Can I change the contract size?
A: Most exchanges offer standardized contracts, though some allow custom sizing for institutional accounts.
Q: Why do point values vary between exchanges?
A: Platforms may use different:
- Underlying asset valuations
- Tick size conventions
- Settlement currencies
Q: How does funding rate affect profits?
A: Periodic payments between longs/shorts adjust net earnings but don't impact point value calculations.
Key Takeaways
- Point earnings = Contract Size × Tick Size
- Always verify contract specs before trading
- Leverage magnifies both gains and losses
- Different contract types share similar calculation logic
Remember: Successful contract trading requires understanding these mechanics plus robust risk management strategies.
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