How does a Futures Market Work?

A market in which parties make contracts on purchasing or selling commodities in the future is called a futures market. Contracts include a specified date when the parties must arrange settlements and the price for the commodity. That is, the price for commodities is set today and locked until the contract expiration date.

Cryptocurrency is a highly volatile asset, which allows for successful crypto futures trading. This type of financial agreement takes place on cryptocurrency exchanges. The most reliable platforms supporting crypto futures market are:

  • WhiteBIT
  • ByBit
  • Kraken
  • FTX
  • Binance.

How to Trade Crypto Futures?

One of the most common strategies used in the cryptocurrency futures market is “Long and short”.  A trader can pick one of these options, where long means the trader believes the coin’s rate will increase in the future, and short means the trader expects for drop in the asset’s price.

When the trader goes long, one waits until the asset’s rate reaches some level of growth and sells his savings to fix a profit.

A trader that goes short sells his holdings first and waits for the price to drop. When it happens, the trader buys coins back. 

To succeed in the futures market crypto enthusiasts learn how to predict price movements correctly. Traders investigate crypto charts, find patterns, carry out tech analysis, find indicators, learn the charts’ candlesticks, etc. So crypto futures trading is always connected with awareness of the current situation in the market, news background, and past indicators and patterns.

Traders can also use leverage in futures market crypto trading. Leverage means multiplying the amount the investor enters the position, thus, multiplying profits. However, leverage brings to the position liquidation in the case the market moves in the opposite direction to the trader’s forecasting.

Every platform offers different conditions for crypto futures market trading. We recommend starting with registering on WhiteBIT. This crypto exchange allows demo trading, which is a good option for those who want to understand how crypto futures trading works and practice different sizes of leverage. 

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