Home Crypto Trading Cryptocurrency Futures Trading: A Closer Look on the Market

Cryptocurrency Futures Trading: A Closer Look on the Market


Aside from the crypto coins, trading cryptocurrency futures has also been starting to become a common practice in the crypto world.

But, how does it differ to cryptocurrencies, themselves? Here’s a closer look at cryptocurrency futures, trading futures, and the crypto futures market.

What are Cryptocurrency Futures?

Unlike cryptocurrencies that you buy at a certain price and sell for another, cryptocurrency futures is a way to trade the price action of cryptocurrency in the future for some crypto assets. It involves buying forward contracts where you buy and a crypto asset from a date in the future while paying the quantity and price determined at present.

How to Trade Cryptocurrency Futures

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The simple process of the understanding crypto futures exchange is buying crypto futures contracts at a predetermined price. Trading futures can also either be long or short. Going long means you believe that the price of the coin will go up. Going short, on the other hand, is when you believe that the price of the coin will go low.

Pros and Cons of Trading Crypto Futures

To take a much closer look at trading crypto futures, here’s a list of all its benefits and disadvantages.

Pros of Trading Crypto Futures

  1. Leveraged Trading

One of the advantages when trading crypto futures is that it lets you leverage your capital, especially with the risks when it comes to holding cryptocurrency during exchanges. Trading crypto is advantageous for security reasons during crypto-based exchanges.

  1. Allows you to bet against the market

Crypto futures work both ways, which means it allows you to bet with the market or against it.

  1. Hedging
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With its advantages of leveraged trading and betting against the market, trading futures also makes a great method to hedge any portfolio. You can purchase short futures for hedging your portfolio when the market is bearish, instead of selling your coins.

Cons of Trading Crypto Futures

  1. High Volatility

Although volatility is often what traders leverage in, it’s also what makes the market sentiment a bit hard to determine.

  1. High Risk

Trading crypto futures is considered as one of the highest risk instruments, which is why it’s perfectly important to pay attention to your liquidation price.

  1. Costly

Nothing is free, and most of the time, the fees can be a bit expensive, although it can differ depending on the exchange.

  1. Sudden kills

Sudden and unexpected short or long squeezes and easily turn a profit into a huge loss, and it’s part of the game in the crypto futures market.


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