Futures trading

Cryptocurrency futures trading is a type of derivatives trading where traders enter into a contract to buy or sell a digital currency at a specific price at a set time in the future. Instead of trading spot, where the digital token is exchanged immediately, futures trading focuses on contracts that track the cryptocurrency's price, allowing traders to bet on price movements without owning the actual asset.

Cryptocurrency futures have been gaining traction due to their ability to offer larger returns through leverage, enabling traders to hold more positions than their capital typically allows. It's popular for hedging, speculating, and mitigating risk in the unpredictable crypto market.

Types of futures contracts

1. Perpetual futures: These contracts do not have an expiration date, allowing traders to maintain positions indefinitely. They are popular among cryptocurrency traders due to their flexibility and continuous funding fees to maintain positions.

2. Fixed-term futures: These contracts expire on a specified future date, such as weekly, monthly, or quarterly futures contracts.

3. Inverted futures: The underlying asset (e.g., BTC) is used as the settlement currency instead of stablecoins.

Advantages of futures trading

• Leverage: Amplifies potential profits by allowing traders to control large positions with minimal capital.

• Shorting: Traders can profit when the cryptocurrency price decreases by establishing short positions.

• No ownership required: Traders can speculate on price movements without owning the actual cryptocurrency.

Risks of futures trading

• Volatility: Prices are highly volatile, increasing the risk of liquidation, especially when using high leverage.

• Complexity: Trading futures is a risky and complicated endeavor.

• Funding fees: Traders holding perpetual futures must pay funding fees, calculated based on the market, which can diminish gains.

Cryptocurrency Exchanges Supporting Futures Trading

• Binance (Binance was founded in 2017 by Changpeng Zhao (known as CZ) and has since become the most popular and technologically advanced cryptocurrency exchange in the world.).

• Bybit (Bybit is known among the crypto community as an exchange that often holds promotions and gives out rewards.).

• OKX (OKX is user-focused first and foremost. They relied on maximum convenience and speed of the exchange, and OKX does this very well. In addition, OKX has its own and very convenient decentralized wallet to store tokens securely.).

• MEXC (MEXC is an exchange with the best conditions. Low trading commissions, frequent promotions, no KYC when withdrawing up to 10 BTC per day.).

• Kucoin (Popular exchange, operating since 2017. In our opinion, Kucoin is the crypto exchange with the most user-friendly user interface we have ever seen.).

• WhiteBIT (WhiteBIT, launched in 2018, has quickly emerged as one of Europe's prominent cryptocurrency exchanges.).

• Gate.io (Gate.io, established in 2013, is one of the most comprehensive cryptocurrency exchanges in the market today.).

• HTX (Huobi) (HTX is a trusted crypto exchange that has been operating since 2013 and has over 47 million users worldwide.).

• BingX (Founded in 2018, BingX has emerged as a popular cryptocurrency exchange, particularly known for its copy trading features and versatile trading options.).

• CoinEx (The CoinEx cryptocurrency exchange was founded in Hong Kong in 2017. Today, it serves over 10 million users worldwide, which speaks to its reliability and popularity.).

• Bitfinex (Founded in 2012, Bitfinex is one of the oldest cryptocurrency exchanges, offering a wide array of advanced trading features.).

• Bitmart (Founded in 2017, BitMart has grown to become a prominent global cryptocurrency exchange, offering services to more than 9 million users across 180+ countries.).

• XT.com (XT.com was founded in 2018 and operates worldwide, but is especially popular in Asia. XT is not just a cryptocurrency exchange where you can trade cryptocurrencies, but an entire ecosystem for trading, earning, and borrowing cryptocurrency.).

• CoinW (Founded in 2017, CoinW has become a significant player in the global cryptocurrency exchange space, serving over 7 million users across more than 120 countries. ).

• Deepcoin (Deepcoin, a cryptocurrency exchange founded in 2018 and headquartered in Singapore, has become popular among 10 million users worldwide.).

• LBank (LBank has gained popularity worldwide, particularly in Asia and Europe.).

• Toobit (Toobit is a relatively young cryptocurrency exchange, founded in 2022. Since then, more than 3 million users have registered on the platform, which is a good sign for a newcomer to the cryptocurrency market.).

• CEX.io (CEX.io is a cryptocurrency exchange founded in 2013 and known for holding licenses to operate in regions where they are difficult to obtain. This demonstrates that the exchange is reliable and operates within the legal framework even in complex jurisdictions, providing users with optimal conditions for interacting with cryptocurrency.).

Cryptocurrency futures trading offers vast profit opportunities, especially in a bear market. However, futures trading, especially on margin, involves a level of risk that should not be underestimated and can only be effectively executed within the framework of a well-informed and disciplined strategy. It can be a powerful tool in the crypto market for those willing to navigate its complexity.