Large cryptocurrency trading platforms offer many options for generating income using digital assets. It can be simply swapping coins and making money on their rate changes or more advanced tools, such as crypto futures, margin trading, leverage, etc. Today, we would like to discuss how does crypto futures work and outline some peculiarities of this trading method.

How to Trade Crypto Futures?

This complex type of trading requires in-depth market analysis and experience. Before making a futures contract, investors do the following types of research:

  1. Tech analysis of a crypto asset helps identify historical price indicators and patterns. It is connected with investigating crypto charts. 
  2. Fundamental analysis helps to figure out external factors that affect the crypto market – the global economy, inflation, crisis, and other processes.
  3. Quantitive analyses – helps to calculate the market indicators based on the two previous types of research and understand where the market is going to move next.

Once an investor conducts the research, one can predict the future asset’s price movement and be ready to enter the futures contract. Such a contract is made on one of the crypto exchanges that support this option (Binance Futures, ByBIT, FTX, WhiteBIT). A trader either forecasts the market drop or increase; depending on this, one enters:

  • a long position
  • or a short position.

Long means the trader aims to sell his coins when their value increases; short means the trader will purchase assets at a lower price. A contract includes the date when the trader must fulfil his obligations and the underlying asset’s price.

Peculiarities of crypto futures trading:

  • You can use leverage – borrow funds from a trading platform to increase your initial investments. Thus, you can enter the futures deal with a better position and, therefore, make a higher income.
  • Liquidity. Pick such crypto assets that have significant liquidity. The bigger the liquidity – the more demand for an asset.

Some exchanges (WhiteBIT) offer futures contracts with no expiration date. It means you don’t necessarily have to buy or sell coins, but you can receive income or pay penalties depending on the market fluctuation and your position in the deal as long as you wish.

Look for more information on crypto futures on the WhiteBIT blog. There you will find guides and recommendations on trading.