Before you Start Future Trading
you need to Know These Things
1. What Are Crypto Futures
- Derivatives contracts allowing traders to buy/sell crypto at a predetermined price on a future date.
- Traders speculate on price movements without owning the underlying asset.
2. Types of Crypto Futures
- Perpetual Futures: No expiry date, traded with funding rates to maintain price alignment.
- Quarterly/Daily Futures: Fixed expiry dates (e.g., March, June, September, December).
- Inverse Futures: Settled in crypto (e.g., BTC) instead of fiat (e.g., USD).
3. Key Features
- Leverage: Allows trading with borrowed funds (e.g., 10x, 50x, 100x), amplifying profits & losses.
- Margin Trading: Requires initial margin (collateral) to open positions.
- Hedging:Used to protect against price volatility.
- Short Selling:Profit from falling prices by selling futures contracts.
4. Popular Crypto Futures Exchanges
- Binance Futures
5. Risks in Crypto Futures Trading
- Liquidation Risk: High leverage can lead to forced position closures if the market moves against you.
- Volatility:Crypto prices can swing drastically, increasing risk.
- Funding Rates (Perpetual Futures): Frequent payments to balance long/short positions.
- Exchange Risks:Hacks, regulatory crackdowns, or platform failures.
6. Benefits of Crypto Futures
- 24/7 Trading: Unlike traditional markets, crypto futures trade round the clock.
- Liquidity: High trading volumes on major exchanges.
- Diverse Strategies: Scalping, swing trading, arbitrage, hedging.
7. Common Trading Strategies
- Trend Following: Buy in uptrends, sell in downtrends.
- Arbitrage: Exploiting price differences between exchanges.
- Spread Trading: Long one contract, short another (calendar or cross-market spreads).
- Hedging: Reducing risk by taking opposite positions in spot & futures markets.
8. Future of Crypto Futures
- Growing institutional participation.
- More regulated products (e.g., Bitcoin futures ETFs).
- Expansion of altcoin futures trading.
