Crypto Futures Trading Explained


Sandeep Singh

There are many crypto trading strategies explained on the Internet. Some of them are relatively simple and mean you only buy assets and hold them until their price grows. Some strategies require deeper knowledge and a lot of practice. Large crypto platforms like WhiteBIT, KuCoin, Binance, etc. offer many convenient tools for making a profit on the cryptocurrency market. One of the most popular tools is crypto futures trading, which we will discuss in this article.

The Essence Of Crypto Futures Trading

When you have just a small initial amount of money to invest, you can multiply it by using crypto futures trading. The fact is that when trading futures, you do not necessarily purchase assets, but you buy a contract. The contract includes the exact date of its expiration and the price of the asset you claim by that moment. You kinda predict the asset’s rate.

Thus, it is crucial for trading futures that you clearly understand the further market fluctuations and options for you – either the rate will drop or rise. Actually, it is price speculation.

There are two ways to trade futures:

  • Long
  • Short

“Long” means that you are confident that the asset’s rate will skyrocket in the future, so you buy a derivative contract for the “long term”. When the contract expires, and you see that the coin’s rate really increased, meaning you were correct in your forecasting, you receive incomes.

Another way is to “go short”. Similarly, you conclude a contract where you claim that the asset’s price will drop. When the day comes, and the rate really decreases, you receive income, for you were right about your predictions. In this regard, let’s see what the most popular assets for futures trading are.

The Most Popular Crypto Assets For Trading Futures

As mentioned above, successful futures trading requires your expertise in the market. Picking an asset, pay attention to credible and stable-developing projects. The more stable the asset is, the easier it will be to predict its price fluctuations. BTC futures are the most popular because Bitcoin is the leading crypto asset on all ratings; it has high liquidity and the biggest capitalisation as well. We may also add the following crypto assets to this list:

  • Ethereum
  • Cardano
  • Binance Coin
  • Solana

These are today’s most promising digital assets that have a deep technological core, many user cases, and take leading positions in the market. So it is easier to predict their future development. Notice that to make a correct forecast, you should investigate the project and its nearest plans, for it directly impacts their prices.

The Advantages of Trading Futures

Here are the benefits of crypto futures trading:

  1. You can multiply your capital. Even if you have just a small initial amount, you may use leverage, which multiplies it many times. You may pick any leverage – X2, X10, X50, X100, etc. However, you should remember that the bigger leverage you take, the more you lose if your forecast does not come true. So we recommend starting with small leverage.
  2. Trading market futures enables earning on both upward and downward market trends. So if you think the asset’s rate will drop, you open “a short” position.
  3. Provided that you have experience and skills, futures trading allows hedging risks. Picking the leverage, you already decide on how far you are ready to go and how much you are prepared to lose in the case of failure.

Where Can I Practice Market Futures?

At the beginning of this article, we have mentioned a few credible crypto platforms that allow for crypto futures trading. One of them is WhiteBIT. It is one of the biggest crypto platforms in Europe, with over 2 million registered users. You will find there over 400 trading pairs.

The platform expands the list of pairs for futures trading and offers the lowest fees on futures contracts. Also, WhiteBIT enables perpetual crypto futures, where asset prices keep close to the spot market prices. It is possible due to the unique funding mechanism of the platform. How does it work? Depending on traders’ positions, they receive their payouts on exact timeframes, pre-agreed in contracts. Traders that opened a “long” position pay those traders who went “short” and vice versa.

Check out the WhiteBIT platform and look for a demo account to see how it works in practice. Demo trading does not require your direct investments. You use only domestic coins created especially for demo trading. You can’t lose them if your strategy does not work and can’t cash them out if you succeed. So practising demo trading futures, you may try different leverage sizes and see how it works. You can find many things you might not have noticed when reading the theoretical part of futures trading. Thus, a demo account will uncover all the pitfalls in your strategy, so you will be prepared for trading using real money and feel more confident.