If you have any experience trading crypto assets, you have probably seen such an option as cryptocurrency futures on major exchanges and platforms. So, in this article, we would like to discuss the pros and cons of this tool and describe constant crypto negotiation contracts, which can be found on the WhiteBIT trading service.
What are Crypto Futures?
Futures contracts allow traders to guess how the value of digital currencies will change. These contracts allow traders to buy or sell a precise amount of assets at a specific price and date. Traders usually choose contracts with the highest trading volume and the lowest level of volatility when looking to trade cryptocurrency futures. This is exactly why Bitcoin is the best crypto for futures trading.
Here is a step-by-step explanation of how these financial instruments work:
The contract specifications come with specific details that traders need to consider before making any decision – amount of cryptocurrency per contract, the asset being traded, the deadline and the settlement price.
Traders have the option of taking either a long or short position. Choosing a long position indicates the trader's belief that the price of the crypto asset will increase. Conversely, choosing a sell position indicates the expectation of a decline in price.
Margin and leverage. In most cases, futures contracts require investors to deposit an initial margin, which is a fraction of the total value of the contract. This margin acts as a guarantee, ensuring that the user can handle potential losses. Leverage, on the other hand, allows investors to increase their market exposure by borrowing capital to open larger positions than their original capital.
Resolution. Futures contracts have a predetermined expiration date, and on that date, the contract is settled. The trader is then obliged to either buy or sell the specified amount of coins at the agreed price.
Danger management. Futures contracts involve a degree of risk, including price volatility and the potential for significant gains or losses. Traders should use risk management strategies such as setting stop-loss orders to limit potential losses and diversify their trading portfolio.
To understand all the pros and cons of cryptocurrency futures, welcome to the WhiteBIT blog and exchange where you can try this method with demo tokens. WhiteBIT is a cryptocurrency exchange platform that offers perpetual futures, which are derivative products with no expiration date. Unlike traditional futures contracts, cryptocurrency perpetual contracts do not have a fixed expiration date. This means traders can hold their positions for as long as they want, providing more flexibility. The contracts are designed to closely track the underlying market price of the cryptocurrency.
The platform offers traders flexibility, leverage and support for a range of cryptocurrencies, allowing them to capitalize on market movements and potentially generate profits. However, it is important for traders to understand the risks involved and create a strong trading strategy.