Cryptocurrency Futures Explained - Basic Guide

Cryptocurrency Futures Explained – Basic Guide

There are different ways to trade virtual currencies. You can use spot trading or trade with cryptocurrency futures. In this guide, we are going to share with you the main differences between spot and cryptocurrency futures and how you can profit with this trading strategy.

Disclaimer: this post should not be considered investment advice. This is only for educational purposes only. Never invest more than what you are able to lose and always ask for information to your professional financial advisors. We are not financial advisors.

What are Cryptocurrency Futures?

Cryptocurrency futures allow traders to gain exposure to the virtual currency market and betting on whether the price of virtual currency would move higher or lower. This is the main difference with traditional spot trading, where you can only expect the price a digital asset to move higher.

With cryptocurrency futures, you are trading derivatives. These are contracts that are based on the price of an underlying asset, in this case, of cryptocurrencies. These traders will be opening trades to buy or sell a contract at a specific time in the future and at a predetermined price.

However, most of the cryptocurrency trading platforms offering crypto futures are also allowing users to trade perpetual contracts. Perpetual contracts do not have a specific expiry date. You can hold this position as long as you want, which is going to make it easier for you to trade.

Cryptocurrency futures are also allowing users to increase their exposure to the market by using leverage. Users can trade with margin and increase their profits if their trade moves in the right direction.

Cryptocurrency Futures vs Spot Trading

Futures trading is one of the most advanced ways for users to trade in the cryptocurrency market. Spot trading is the simplest way to do so. If you just want to gain exposure to virtual currencies and trade digital assets, the spot market is going to be the right way to do so.

Instead, if you prefer to gain more exposure to cryptocurrencies or bet against the price of a virtual currency going up, then Cryptocurrency Futures will give you all the trading tools you need.

One of the best platforms to trade both futures and spot is Binance. This exchange is offering one of the best solutions for traders that want to handle digital assets. The platform is offering perpetual futures contracts and also quarterly Bitcoin futures that would help traders diversify their risk.

By using Cryptocurrency futures, traders will also be able to trade with margin and open a leveraged position. You can use $1,000 (close to 0.1 BTC) to buy 1 BTC if you use 10x leverage. In this case, your initial margin is going to be 10% of the total order. This would act as your collateral to keep your position open. If you don’t want to be liquidated, then you should also use stop-loss order that would reduce your losses to the minimum.

Despite having the possibility to trade with leverage, you need to also know that this is very risky. If you do trade with large leverage, then your position could be heavily affected and liquidated with small fluctuations in the price of the underlying digital asset.

Trade Like a King With AltSignals

AltSignals is one of the best and most recognized trading signals providers in the world. The company has been offering some of the most accurate trading signals in the last few years. Users will be able to trade in both futures markets and spot exchanges. This is going to make it very profitable for users that want to improve their trading strategies over time.

It is worth taking into consideration that AltSignals is also supporting the Cornix trading bot to automate trades. If you want to get some extra funds and profits at the end of the month, you can easily set up the Cornix trading bot and follow AltSignals to get some of the most accurate trading signals in the world.

Conclusion – Cryptocurrency Futures Explained

In this guide of Cryptocurrency futures, we have explained to you how it is possible to trade with virtual currencies in both spot and futures markets. Traders will be able to improve their strategies by using margin and also futures contracts in the cryptocurrency market.

Remember that trading with leverage can be very profitable but it is also very risky. Before trading always ask information to your professional financial advisor and never invest more than what you are able to lose.

Proficient authors guiding you with transparency, integrity and education through the finance international markets

The AltSignals writing team consists of experts dedicated to the world of finance and technology, with a particular focus on cryptocurrencies and forex. Our writers bring a broad range of knowledge and experience, cultivated through years of arduous and direct involvement in financial markets, as well as intense technological collaboration.

Editorial approach

At AltSignals, we believe that transparency and education are the key to empowering our readers. Therefore, our content is meticulously researched to ensure its accuracy and thoroughness. Each of our articles is created with the aim of providing educational insights and in-depth analysis, helping both beginners and experienced traders.

Commitment to quality

Integrity is certainly the foundation of our editorial process. The team follows rigorous journalistic standards with careful review, all to ensure that each publication is meticulously researched and exceeds our readers’ expectations.

Our mission is to provide analysis that informs as well as guides users and enthusiasts through the complexities of the cryptocurrency and forex markets. In line with our motto of “quality over quantity”, we guarantee that only the highest quality trading signals are published.

In addition to our commitment, which extends beyond the simple transmission of useful information, our in-depth analysis focuses on profitability and effectiveness squarely, avoiding the common industry habit of prioritizing profit over accuracy. Our traders are strategic experts who offer personalized help to those seeking worthwhile portfolio management tactics.

Diverse knowledge

Our authors are proficient in a variety of topics across the financial spectrum, from emerging trends in blockchain to the nuances of forex trading. This diverse range of knowledge allows the team to cover several topics, ensuring our content is always comprehensive and deeply specialized.

Interactivity and support

We understand that the world of trading can be complex for many. Therefore, alongside producing informative articles, our team is also committed to interacting with the community. Through comment sections, forums and direct support, we encourage our readers to seek clarification and sharpen their understanding, promoting an environment of continuous learning.

Future vision

Looking to the future, the AltSignals writing team is imbued with a vision that transcends regular publishing, and continues to dedicate itself to discovering and reporting on the latest innovations and trends available in the market. We are constantly seeking to improve our skills and expand our knowledge, with the ultimate goal of being a reliable and respected source in digital financial journalism.

There is great commitment to discovering and reporting not only the latest news and trends in the market, but also to equipping our readers with the tools they need to navigate volatile markets with confidence. We firmly believe that, with the support of an appropriate platform coupled with accurate guidance, our readers and traders can turn market volatility into a competitive advantage.

Join us

Follow AltSignals to stay up to date with the latest developments in the world of finance and technology, and explore how our insights can help improve your trading strategies. The AltSignals team is here to guide you through the exciting, dynamic and challenging world of financial markets.