There are many tools for efficient cryptocurrency trading. Large platforms like Binance, Coinbase, and WhiteBIT offer the following range of trading tools:
- staking crypto;
- margin trading;
- p2p exchange;
- spot markets;
- futures trading.
The latest one is the most complex technique for crypto trading, and that’s what we’re going to discuss today. So what are futures in crypto?
Key Points of Crypto Futures
Roughly speaking, trading futures is speculation on crypto assets’ values. This method allows earning on the downward market trend. The essence is “betting” on further price movement by a specified date. Futures contracts include the price, the expiration date, and other conditions both parties must fulfill when the day comes.
There are two options for a trader:
Going long means you expect the price will grow and owe to sell your holdings at a pre-agreed price on a pre-determined day. Short means your expectations about the asset’s rate are pessimistic, so you owe to buy coins on the expiration day at an established price.
Crypto futures leverage is one of the main components in crypto futures trading. Leverage means borrowed funds that you use to increase your possible income as a result of futures contract expiration.
Leverage is the way to multiply your investments while having a small amount initially. Borrowed funds can reach even 100X on some crypto exchanges. However, it is important to remember that the bigger the leverage, the higher the risk.
The WhiteBIT crypto futures platform allows for 5X, 10X, and 20X leverage. That is, having, for example, $100, you can use a 10X leverage and open the position with $1000. It allows for a ten times bigger return if your futures contract works as you expect. On the other hand, it will bring you losses if the asset’s rate moves in another direction. Then your position can be liquidated. Be attentive when trading futures, and try to use small leverage first.