What is Crypto future trading? Crypto futures give investors the opportunity to bet on the futures price of a crypto without actually owning or handling it. We provide more details about futures in this article. Of course, The best crypto exchange CoinW is also recommended.
Why choose CoinW platform for crypto futures trading?
Table of Contents
CoinW is a well-known crypto exchange. Many crypto owners choose it mainly because CoinW has the function of tracking stop losses. A trailing stop is a modification of a typical stop order that can be set at a defined percentage away from the market price. It can help traders limit losses and maximize profits when the market moves in the trader’s favor. When the price moves in a favorable direction, the trailing stop move with it by a certain percentage. As long as the price moves in the trader’s favor, it keeps the trade open and continue to profit. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction.
What is crypto futures trading?
Futures trading is a way to speculate on the value of assets, including cryptocurrencies, rather than actually owning them. Similar to commodity futures and stock futures, crypto futures allow traders to bet on futures prices of digital currencies. Bitcoin futures is the most popular crypto futures contract.
Advantages of crypto futures trading
1. Strong liquidity and high returns. The liquidity of crypto is relatively strong, and investors can buy or sell it at any time. With the increased liquidity of funds, the level of income will be improved to a certain extent.2. It can reduce losses. Generally, the income of crypto is not fixed, and it changes with the income change of crypto price fluctuation.3. You can manipulate the price of crypto. When the proportion of crypto is large, investors have the power to manipulate the price fluctuation of crypto.
Disadvantages of Crypto Futures Trading
The disadvantage of crypto futures trading is that it has leverage. If crypto futures have leverage, there will be a risk of position explosion. You should reduce futures leverage by controlling positions. Heavy futures trading is a big taboo.1. Great leverage. Therefore, the slight fluctuation of the spot market price has a huger impact on it. If the fluctuation of spot market price is unfavorable to it, the margin must be added. If it is not added, it will be forced to close the position, causing huger losses.2. Futures are investments in the future spot market or risk aversion. The uncertainty of future spot market price makes futures investment difficult to grasp.3. Futures in some countries are not developing well. Therefore, there is a certain risk of institutional defects.
How does crypto futures trading work?
Maturity date: refers to the date on which the futures contract must be settled. In other words, one party must buy, and the other party must sell at a predetermined price. However, it is worth noting that traders can sell their contracts to other investors before the settlement date if they wish.Unit of each contract: This defines the value of each contract to the underlying assets, and varies from platform to platform. For example, a CME Bitcoin futures contract is equal to 5 Bitcoins (denominated in US dollars). However, a Bitcoin futures contract on Deribit is equivalent to $10 worth of Bitcoin.Leverage: To increase the potential income of traders in futures trading, the exchange allows users to borrow funds to increase the trading scale. Similarly, leverage varies widely between platforms. Kraken allows users to increase their transactions by up to 50 times, while FTX reduces its leverage ratio from 100 times to 20 times.
Final thoughts
Futures contracts also have two different settlement methods. One is physical delivery, which means that the buyer purchases and receives Bitcoin at the time of settlement. One is cash settlement, which means that there is a transfer of cash (usually US dollars) between the buyer and the seller at the time of settlement. Futures contracts involve the same risks as any other type of transaction. Risk can be reduced by studying the market, using other tools such as indicators and technical analysis, and setting goals and risks for each transaction.
