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Doing Futures Trading on Biggest Crypto Exchanges

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One of the more popular trading trends at the moment is futures trading, but it can be problematic to find an exchange that offers this service. We have looked at the best crypto exchanges that offer futures trading and would like to provide you with several tips to get you started.

Trading Basics

Many cryptocurrency investors will buy up the crypto they want to trade and then hold onto it for a period of time, until they decide to sell or trade it. This is a great way to invest in cryptocurrency, but it does have some drawbacks and risks.

The main drawback of traditional trading in cryptocurrency is risk, especially since the market is so volatile. You might purchase a token at $10 expecting it to go up from that point. Then, a competitive token comes along, and your token drops in value. These drops can be radical. Investors have lost their entire life savings because tokens they invested in turned out to be overhyped or scams.

Another disadvantage of traditional trading is that you will also need to take responsibility for the safety of your investment. Unsurprisingly, it isn’t easy with crypto. A small number of traders each year are hacked and have their wallets emptied. These hackings can be quite sophisticated and compromise entire wallet providers.

Difference of Futures Trading

Right off the bat, futures trading is not without risks, it is actually a practice that you will need to be very skilled to master. But, if you are up to the challenge, futures trading can be extremely lucrative. Futures trading allows you to bet on the value of a token at a future point. For example, you might bet on Bitcoin going up in price. You then stake money on that notion, and if the value increases, you can cash out your stake plus the profit.

If the value decreases, you will hit a threshold that essentially closes your position minus the loss. There are other types of futures contracts, but the main one that is used is a contract for difference, better known as CFD. With it, you profit or lose on the price difference.

The advantages of this type of trading are that you don’t need to store your crypto (as you don’t own it) and can avoid the associated risks. You also have buffers in place to prevent losing all your money if a token’s price plummets.

Long, Short, and Perpetual Contracts

Common instruments in CFDs are perpetual contracts, where the staking price is close to the price of the asset that is being staked on. This might mean you stake $9 for a token valued at $10. Perpetual contracts then allow you to track that price indefinitely.

Another option is a long contract. It has a long-term expiry date, around a month from the stake. When the date hits, the contract closes, and whatever funds are left in the contract are returned. These are great if you expect a crypto to do well over a long period of time.

If you think a token will do well over a shorter period of time, then a short contract is the futures contract that you need. Like the long contract, it will expire, but the timeframe will be smaller than in a long contract.

Where to Take Part in Futures Trading

In many jurisdictions, CFD and futures trading in general are highly regulated, which means only a few crypto exchanges (which largely avoid regulation) offer this service.

As a result, only the most trustworthy exchanges engage in futures trading as they need to comply with rules and regulations. Moreover, their operations must be fair and transparent.

If you are looking for a reliable place to trade your crypto safely, quickly, and anonymously, you should check out Godex. It is on our list of the biggest crypto exchanges that offer anonymity, safety, and high transaction speed.

Are There Risks Involved in Futures?

Any trading or investment instrument carries a degree of risk. Therefore, it is important that you research the instruments you’re using. Without the element of risk, there are no potential rewards, so you must weigh up what trading method is right for you.

Traditional traders also carry risks as mentioned earlier in this article, so there is no risk-free option when it comes to trading any asset or commodity. The important thing is that you research the matter and know what risks are involved whenever you make any trading decision.

Using a reputable exchange will also mitigate some of the risks involved with CFD trading as these exchanges notify traders in real time. Always use an exchange that is transparent and keeps you informed at all times, no matter which trading option you find preferable to you.

About the author


Jonathan Butt