Futures is a financial tool allowing speculation on the future asset’s price. The underlying asset can be any commodity or stock whose price can be predicted: gold, grains, etc. What are futures crypto? It is the same financial instrument working with digital assets. Governments do not control cryptocurrencies’ prices, so they are more volatile than other traditional assets. It opens a lot of earning opportunities for investors.
What are futures in crypto? It is a process when two parties conclude a contract where they document a pre-agreed price for a cryptocurrency and the date when the parties must fulfill their obligations (to buy or sell assets).
Now that we have answered the question “What are crypto futures?” let’s move forward and see how they can be implemented.
Strategies for Crypto Futures
Let’s consider the most common strategies for crypto futures.
- Spread trading. A futures contract can be sold to another person. Spread trading strategy implies buying one contract and selling another one, and the main goal here is to receive income from changes between the buying price of one contract and the selling price of another one. Differences between two contracts’ prices help reduce risks. The market volatility does not have any impact on the spread.
- Long or short. This crypto futures strategy implies a trader picks either one goes long or short. Going long means a trader expects the asset rate will grow, so one plans to sell his holdings when the price reaches the indicated level. Going short means a trader expects the rate will fall, so one sells his holdings and wait for the contract expiration date to buy assets back at a reduced price.
You can practice different futures trading strategies using the WhiteBIT exchange. The platform offers all the necessary information, such as crypto charts, trading tools, and supported pairs for crypto futures trading. To better understand how futures work, you can try demo trading. It will help you receive the necessary skills and find all the pitfalls you might not notice when trading in real markets.