Cryptocurrency trading is a popular way of making money online. Many people join this field and learn how to use digital assets with benefits. There are many different tools for trading. Some of them are easier; others are more complex. For example, one of the complex tools is futures trading. It is a financial instrument that allows traders to profit from forecasts of asset prices. It is a type of speculation on future asset prices based on a detailed analysis of their past indicators and possibly the factors that can make sense of them. BTC futures are the most widespread option for this type of crypto futures trading.
How do Bitcoin Futures Function?
Parties make an agreement specifying the value of BTC and the date on which they must purchase or sell the currency. The party whose prediction is correct receives a profit. Why are futures on Bitcoin so popular? To select an asset for futures derivative trading, it is necessary to assess its trade volume and market cap. BTC has the largest market capitalisation and trade volume, and it is always in demand. Even during a downtrend, many investors invest in BTC for long-term profits.
What Futures Method to Begin With?
The most common strategy in futures trading is “long and short”: you analyse the rate changes of BTC and pick among these two options:
- Long is when you estimate that the coin’s value will increase. You conclude a BTC futures contract where you mention the future value of the coin. You sell your stake in the currency at a higher value.
- Short position is used when your research brings you to the idea that the coin’s value will drop. You sell your BTC and are left empty-handed by specifying the reduced value and the date on which you are obliged to buy BTC. If your prediction is correct and the BTC value actually falls, you purchase coins at the reduced value.
To get an idea of how it works in practice, you can try this type of trading with a demo account on the WhiteBIT exchange. The platform offers a convenient interface and tools for successful trading.