Futures belong to the type of trading where two parties make a contract on buying and selling an asset on a certain day in the future and at a predetermined price, represented in the contract. For a better understanding of what are futures in crypto, let’s take a closer look at them.
As we mentioned, crypto futures are contracts, also called “derivative contracts” between two parties. Both bet or forecast the future price movement of the underlying asset. For example, if we take BTC futures, the underlying asset is Bitcoin. The contract includes the number of units, the value of the asset and the date of expiration both parties must meet.
How Does Crypto Futures Work?
Futures help investors hedge risks in the highly volatile crypto market. The contract ensures that investors will buy and sell digital assets at the pre-agreed price. The challenge is to forecast the price movement direction correctly. If the coin’s rate behaves not as you expected, you may end up paying for this asset a higher price than in the market or selling with no advantage.
To succeed in futures trading, you should understand how the market works, and what events can affect the coin rates. It is recommended to trade those assets that have a high level of liquidity, for example, futures on Bitcoin. It is the most stable growing asset in the long-term perspective.
The popularity of futures trading is growing, and many popular exchanges enable this function:
- White BIT
- Binance Futures
- KuCoin Futures
- And many other platforms.
These services offer convenient futures calculators where you may enter the necessary data like entry and exit positions, and evaluate the risks of your trade positions. On the White BIT platform, you can practice futures trading, for this type of trading is pretty challenging and requires some time and practice to comprehend how it works.