How to Trade Crypto Futures?

Image by Pete Linforth from Pixabay

Advanced investors and traders often use crypto futures trading as a tool for making significant profits even on a downward-moving market.

Indeed, this is one of the methods allowing for generating income when the market drops.

Of course, it requires a lot of effort and knowledge, so let’s discuss it in this article and answer the question, how does crypto futures work?

What is Crypto Futures?

From the name, it becomes clear that this trading method is connected with price forecasting for the future.

Traders conclude an agreement where they indicate the value of a crypto asset and the date when they are obliged to buy/sell it. There are options:

  • Long a trader goes “long” when one believes the asset’s value will increase by the contrast’s expiration date. If that really happens, one sells his coins and makes a profit from the price change.
  • Short – a trader goes “short” when one believes the market is about to drop. So one sells his coins and waits until the contract expires, and if the asset’s value really decreases, the trader buys back coins at a lower price, also making a profit.

If a trader’s forecast is wrong, one bears losses. So it is crucial for crypto futures trading to predict market fluctuations correctly.

What’s Needed for Successful Crypto Futures Trading?

Advanced investors do thorough market research: fundamental, technical, and quantitive analysis.

They are connected with crypto charts and historical patterns that give an understanding of how the asset reacts to market fluctuations, as well as an analysis of the global economy and trends. Based on in-depth research, a trader decides if to go “short” or “long” in futures trading.

Another important thing is picking a reliable platform for futures trading. A platform must have a transparent interface, conditions for work, and low fees. For example, consider the WhiteBIT crypto exchange.

It is suitable even for novice users and allows demo options to practice crypto futures trading. Also, it offers perpetual futures contracts that have no expiration date.

To learn more about this option, go to the WhiteBIT blog.

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