What Is Futures Trading Crypto?

Futures trading is a financial tool that has been used for many decades. Commodities such as gold, silver, and grains are often used for futures trading. The essence of futures is betting on the future asset’s price, which requires in-depth knowledge of the market and technical analysis.

What are futures in crypto? Like any other asset or commodity, cryptocurrency can be used for futures trading. However, since digital coin rates are highly volatile, it is difficult to predict them. For that purpose, a trader must do the following:

  • Technical analysis of the project
  • Analyst the assets price fluctuations and trends 
  • Investigate crypto charts, find patterns, candlesticks, etc.
  • Assess risks 
  • Have skills in using crypto futures platforms
  • Evaluate the global economic situation and news background.

How does Crypto Futures Trading Work?

There are many crypto futures strategies, and “Long and short” is among the most popular. A trader can open a long position, which means one expects the asset rate to grow, or a short position, implying the trader’s forecast is the price drop. The trader receives a profit if the prediction is correct and the coin price moves in the predicted direction. 

Futures contracts include the price and the date when the settlement must occur. 

Now that we found out what is crypto futures let’s see where they take place. The most common platforms for crypto futures trading:

  1. WhiteBIT
  2. Kraken
  3. Bybit
  4. Binance.

They offer different numbers of traded pairs and different leverage sizes. Using leverage means borrowing funds from an exchange’s reserves. One should be careful using this option, for it increases the risks of losing positions and holdings. We recommend registering on the WhiteBIT platform because it offers demo trading options where you can practice different tools and financial instruments without losing your funds. In demo trading, you can try different leverage and see how it works in scenarios when your prediction is correct and the opposite.