Futures trading allows generating income while having a small initial investment. Participant in futures trading does not necessarily purchase digital assets. Instead, one buys a contract where the price of the asset is represented as well as the date when one will buy or sell the asset in the future.
Futures are connected with your ability to predict further price movements. The essence of this trading type is speculation on the future rate of coins. For example, you anticipate that the asset’s rate will grow in the future. You conclude a derivative contract for the “long term” and when the date of the contract expires and if the rate really grows, you receive a profit.
Crypto also allow generating a profit on a downward trend in the market. This is called “to go short”. If you think the coin’s rate will drop, you open a short position. When the contract expires and your prediction comes true, you receive your reward.
The most popular are on Bitcoin since this asset is the most stable in long term. The more credible the project, the more stable development it shows, and the easier it is to forecast its rate. However, it requires deep knowledge of the market and events that may affect it.
What Is Futures Leverage?
Leverage is known as a tool allowing you to multiply your initial investment. On the one hand, it opens numerous earning opportunities for investors, and on another hand, it brings huge risks. Leverage is used in futures trading. It can be 2X, 10X, or even 100X of your initial capital. However, if you are a beginner, better start with 2X leverage. If the asset’s price does not move in the direction you forecasted or moves, but not enough, then your contract with leverage can hedge those risks.
These crypto futures exchanges are safe to work with:
- Binance Futures
- ByBit
- KuCoin Futures
- WhiteBIT
The WhiteBIT exchange allows practising trading in a demo account, which is a very valuable opportunity for beginner traders.
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