What Is Crypto Futures Trading and How It Works
Trading crypto futures has become a popular investment option due to the fast growth of the crypto market. It allows traders to make a profit, even in a bear market, by “betting” on subsequent price movements. However, it can be challenging for beginners to navigate. In this guide, we will provide a basic understanding of trading crypto futures, which serves as a good starting point for traders. Let’s find out, what is future trading in crypto.
What is Crypto Futures?
Using this approach, traders can exploit the future price of coins without actually owning the assets. These contracts have a pre-specified price and execution date, allowing traders to profit from both upward and downward movements of the cryptocurrency value.
To understand crypto futures, it's important to familiarize yourself with some key terms:
- Long position. If a trader takes a long position, it means he anticipates the value to go up. If the price does indeed go up, then the trader can sell the contract at a higher value and make a profit.
- To clarify, when you take a short position, you're anticipating a decrease in rate. If the price does decrease as you expected, you can earn a profit by buying back the contract at the new lower price.
- The exchange requires a certain amount of deposit, known as a margin, in order to open a contract. Margin is only a small percentage of the total value, but it enables traders to increase their market positions.
- Traders can control a bigger position by investing less amount of capital. For instance, with a leverage of X10, a trader can manage $10,000 worth of crypto futures by investing only $1,000 of their own funds.
To participate in trading cryptocurrency futures, you should register on a trustworthy and esteemed platform that provides such contracts. BitMEX, Binance Futures, and WhiteBIT are a few of the prominent platforms available. These platforms offer an easy-to-use interface, cutting-edge trading tools, and ample liquidity to execute trades.
To become a successful trader, you need to have knowledge, practice, and discipline. Learn about the basics and important terms, choose a reliable trading platform, use risk management techniques, and keep learning. Start small, be patient, and don't invest more than you can afford to lose.
To upgrade your knowledge about trading in the crypto market, read the WhiteBIT blog. Enter the topic of your interest in the search bar and navigate the blog’s menu to learn the peculiarities of trading strategies. The blog also rolls out news about up-and-coming projects worth paying attention to. You may also join the WhiteBIT community and part-take quizzes and competitions on the platform.
Crypto futures trading offers an opportunity for traders to speculate on the future price movements of cryptocurrencies without owning the actual assets. By taking long or short positions, traders can profit from both upward and downward price fluctuations. With the use of margin and leverage, traders can amplify their market positions and increase potential returns. However, it is crucial for beginners to educate themselves, choose a reputable trading platform, practice risk management, and start with small investments. Continuous learning and staying updated with the latest market trends are key to success in crypto futures trading.