May 02, 2023

What is Futures Trading Crypto? Guide For Dummies!

The cryptocurrency market includes over 20 000 crypto coins and over 500 services and apps for trading and investment.

They all offer different sets of trading tools and crypto pairs, levels of safety, and convenience for users.

Today we would like to discuss one of the most advanced trading tools in trading - futures - in simple terms for a beginner user to understand.

What are the Futures in Crypto?

What is Futures Trading Crypto, Guide For Dummies!: eAskme
What is Futures Trading Crypto, Guide For Dummies!: eAskme

Futures are a widespread instrument in traditional financial markets.

Traders may use any commodity of precious metals or stocks to practice this tool.

The idea is to understand how the market works and to be able to predict its further movements.

The same essence of futures is in the cryptocurrency market. Traders need to know the market so well that they can predict and “bet” on crypto prices.

That is “aerobatics” regarding trading skills. The crypto market is highly volatile and tough to predict, given so many obstacles and circumstances that may turn it upside down.

Futures are contracts between traders or between a trader and a crypto exchange.

Such contracts include data about the parties' obligations, including the day when they need to sell or buy crypto and the value they pre-determine for the deal.

To work with futures derivatives, traders look for a crypto futures exchange. These are the best platforms in this regard:

How Does Crypto Futures Work?

Here are examples of how you can trade futures:

  • You analyze the market and estimate that it will grow soon, so you are willing to sell your crypto coins at a more attractive price and make a profit. For that purpose, you open a long position on a crypto futures exchange and wait until the agreement’s date comes. If the crypto price reaches the level you predicted by that day, you sell your coins at that value. If not - you lose funds.
  • You assume the coming downtrend and want to protect your capital. So you may sell your coins and then enter the short position, claiming you will buy back the coins at a lower price and claim the day you will do that. If the market drops, you make a profit.

If you want to practice crypto futures trading, welcome to the WhiteBIT platform - an official exchange with an intuitive interface and a high level of security for clients.

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