Futures trading is an advanced financial instrument that allows you to bet on future asset prices and make a profit. Futures are applicable to commodities, precious metals, oil and other goods in global markets. The cryptocurrency market is no exception. How do cryptocurrency futures work? Let us discuss this question today.
Crypto futures contracts are made on cryptocurrency platforms that offer this facility, such as WhiteBIT, FTX and Binance Futures. The idea is to make an accurate prediction of the future price of an asset and profit from it. It doesn’t matter if the price goes up or down. The important thing is that the prediction is correct.
There are two ways to buy crypto futures:
- Short, i.e. the assumption that prices will rise and the desire to sell holdings in the future.
- Short – selling an asset assuming the price will fall and buying it back when the value falls.
In both cases, a profit can be made. The key is to forecast correctly. To make a correct price prediction, traders conduct extensive research:
- They study cryptocurrency charts and find historical patterns and indicators.
- They analyze market trends.
- They perform basic and quantitative asset analysis.
A lot of work is required for a correct price forecast. So trading futures is not as easy as it might seem. It requires experience and a deep understanding of how the market works.
Another aspect of successful trading is choosing the right asset.
Best assets for futures trading
Bitcoin futures are the most commonly used, as BTC has the highest liquidity and the lowest volatility. It is not recommended to choose a very volatile currency for trading crypto futures, as it increases the risk.
Other popular coins for futures trading:
Trading crypto futures is convenient on the WhiteBIT exchange. This platform offers leverage (borrowed capital) that allows you to double your initial investment and income.
Alicia Saxon did her degree in psychology at the University of Hertfordshire. She is interested in mental health, wellness, and lifestyle.