What Is Futures Trading Crypto?

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Large and advanced cryptocurrency platforms offer various financial instruments that allow crypto investors to generate income. The market’s instability plays into the hands of skillful traders who are ready to take risks and use the most challenging trading tools. Thus, even having little initial investment, they capitalize and reach success. One of the most complex financial instruments (and it not only refers to the crypto market but the traditional markets as well) is cryptocurrency futures trading. In conventional understanding, futures trading is predicting the future value of a commodity and betting on that price with the obligation to close the futures contract on the exact day in the future. That means a trader is to purchase or sell a commodity at the value one indicated. Of course, it appears to be much more difficult to forecast asset value when it comes to the crypto market. That is why cryptocurrency futures is the option for the most advanced crypto investors.

What are Futures in Crypto?

Like with the traditional markets, futures in crypto imply forecasting the future value. Correct price prediction requires a lot of work with the price charts, for past value changes help traders to estimate how the asset behaves and what affects its price. Here traders use the following types of research:

  1. Fundamental analysis – inclusive research, covering all the aspects of the world’s economy, inflation, different loud events, scandals, wars, etc., that may impact the crypto field.
  2. Technical analysis – a narrow analysis covering everything about a crypto project and its price. Traders learn how the asset’s price behaved in the past, find patterns, and historical indicators, figure out candlesticks on the price chart, etc. That’s a lot of work.

Based on the results, investors conclude the possible future price and enter into a futures agreement. If the price should grow, the trader goes “long” and sells crypto when the contract expires (making money on the value increase). If the price should drop, the trader sells out his assets and then repurchases them at a lower rate. It works perfectly when the trader’s forecast comes true and brings huge losses when the value of the asset moves in another direction. That is the reason why futures is a tool for experienced investors.

Learn more about this type of trading on the WhiteBIT cryptocurrency exchange. The platform offers futures on Bitcoin and other popular assets as well as perpetual contracts with no expiration date.

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Donovan is the CEO and Editor-In-Chief of www.dmfashionbook.com. For all general inquiries please email don@dmfashionbook.com Donovan has a BA in Journalism & Media Studies from the prestigious Rutgers University. He's currently studying entertainment and fashion law.