Crypto futures have become an integral part of cryptocurrency and it explains the agreements between the buyer and seller about the cryptocurrency, especially when it involves the fixed price and time of sale.
Now it is important to pay close attention to the bitcoin trading futures to avoid the risk of extreme price fluctuations. Since crypto is quite uncertain, it is better to ensure safety when it comes to futures trading.
If you are uncertain about the concept of crypto futures trading and want to explore more, we have got you covered.
- Underlying asset and contract size
One of the most important factors about bitcoin futures is the underlying assets like stocks, indices, commodities, etc. Not just the individual underlying asset, but it also consists of contract size, and a total valuation of the asset in question.
- Futures contract
The next factor or component that’s integral to determining the crypto future is the futures contract. Based on their expiration dates, it can be categorized into two types:
Perpetual contracts – They don’t have a fixed expiration date, which makes it easier for the trader to hold individual positions for an indefinite amount of time.
Fixed maturity contracts – This is the second category which comes with a predetermined expiration date.
- Contract size
When it comes to crypto futures on a crypto trading platform, pay close attention to the contract size. It will vary based on the cryptocurrency in question and also on the type of exchanges that are involved. Paying close attention to the value of a particular contract is integral if you want to better understand the cryptocurrency.
- Leverage ratios
This is one of the most undermined elements of crypto futures trading that not many traders pay close attention to. The leverage ratio is variable, meaning that it can range from 2x to 100x as well, depending on the state of the market. Also, the higher the leverage, the higher the profits or losses involved. So, if you are a new trader with not a lot of information, we’d recommend that you tread with caution.
- Margin
Bitcoin trading involves a lot of variables and margin analysis is one that deserves a special shoutout. There are two terminologies that you need to prioritize when it comes to margin – Initial margin and Maintenance margin. Depending on the exchanges you are relying on or working with, the margin amount with vary accordingly.
- Risk management
The last element in the crypto futures trading aspect is risk management. We can’t emphasize this enough but assessing and implementing good risk management strategies is a key to making the most out of the crypto investments you are making. Some important elements include stop-loss orders, take-profit orders, etc.
Relying on a crypto trading platform like BTCC is integral when it comes to crypto futures trading. If you are new to this and don’t know where to start, we hope this explains all the basic elements involved in it. You can seek further guidance from other internet too as there are many good guides and books available on the same.
