Crypto platforms all around the internet offer a variety of trading tools for crypto holders. Some of them support the most advanced financial instrument known in the traditional market as well – futures derivatives. In the conventional understanding, futures mean speculation of price with the opportunity to earn a profit on both declining and growing markets.
Futures crypto trading stands for speculation on crypto assets rates and managing risks connected with the market volatility. Here are the main two versions of how cryptocurrency futures are used:
- Hedging risks. Suppose you have some Bitcoins in your wallet, and the market trend is about to decline, by your estimates. So you are afraid to lose your savings against the looming BTC price drop. To protect yourself from losses, you sell some bitcoin and open a shop position in the futures agreement to buy bitcoins back when their price drops. In such a way, you manage to offset possible losses from the market’s decline.
- Speculation. Suppose you believe the Bitcoin rate will increase, so you want to make money from the market uprise. So you open a long position and make a futures agreement where you owe to sell BTC at a specific price. If the asset’s value really grows, you generate income from selling bitcoins.
The best cryptocurrencies for futures crypto trading are those with the lowest volatility and the higher liquidity. Those are the large and mega-cap coins, such as Bitcoin and Ethereum.
Leverage is a typical tool for crypto futures. You take borrowed funds from a crypto exchange to open a more profitable position. Picking a leverage ratio allows you to manage risks.
Crypto Exchanges to Pick
Choosing a platform or futures trading, pay attention to the available leverage ratio and penalties imposed if a trader does not guess the market direction. Also, consider the fee policy. Here are the most reliable platforms:
- OKX Futures
- ByBIT
- WhiteBIT
- Kraken.
On the WhiteBIT exchange, you may use a demo account to practice trading crypto futures, trying different leverage ratios.