What are crypto futures and how do they work?
cryptocurrency market. Although the assets involved are different and there are some unique aspects, the core principles of trading futures contracts remain the same.
What are Crypto Futures?
It is simply an agreement to buy or sell a specific crypto at a predetermined price at a future date. These contracts are standardized and traded on futures exchanges, which provide a regulated environment for traders. By entering into a futures contract, traders can lock in prices, predict on price movements, and manage risk more effectively.
How Do Crypto Futures Contracts Work?
Crypto futures contracts operate similarly to traditional futures contracts but with some nuances unique to the digital asset market. Here's a step-by-step breakdown of how they work:
Selection of Asset and Contract Type: Traders first choose the cryptocurrency they want to trade (e.g., Bitcoin, Ethereum) and the type of futures contract. There are two main types:
Did you Know?
The world of cryptocurrencies is very dynamic. Prices can go up or down in a matter of seconds. Thus, having reliable answers to such questions is crucial for investors.
View Details»- Perpetual Futures Contracts: These do not have an expiry date, allowing traders to hold positions indefinitely.
