Nov 16, · In brief. A futures contract is an agreement that obligates a trader to buy or sell an asset at a specific time, quantity and price. Bitcoin futures help to bring in additional liquidity to the market and also provide opportunities for arbitrage. Bitcoin Futures Trading Next Level Trading with Cryptocurrency Futures Bitcoin and digital assets are volatile investments. Many traders attempt to manage their risk simply by buying an asset when the price drops or selling it when the price goes up. Dec 22, · In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME options on Bitcoin futures (BTC) are now trading. The value of options on Bitcoin futures is based on the regulated CME CF Bitcoin Reference Rate (BRR) and settles into actively traded Bitcoin futures.
Bitcoin futures tradeHow to trade Bitcoin Futures ( Updated) - CoinDiligent
A variable funding rate is exchanged between the shorts and longs on BitMEX. The BitMEX user interface can seem daunting at first, particularly for newer traders, but this complexity does bring with it a wide variety of different order types and useful information needed to assess the market.
This, complicated UI is somewhat offset by the wide variety of educational content and guides offered by the platform. Deribit full review is a derivatives trading platform that offers a huge variety of options contracts, in addition to futures for both Bitcoin and Ethereum.
The platform is one of the few exchanges to offer leverage for options products but does require KYC for higher volume users. Like most of the platforms already listed, Deribit features a variety of cryptocurrency futures products, including a perpetual futures contract for both Bitcoin and Ethereum.
These are tradeable with between x leverage. However, what sets it apart from the competition is its focus on crypto options, since the platform offers a huge number of options for both BTC and ETH, with a variety of different expiry dates and strike prices, available to trade with 10x leverage.
The platform interface is relatively simple to navigate, with robust charting features provided by TradingView , in addition to a good range of order options—catering to traders of all experience levels. Beyond this, traders may need to pay a variable funding rate, which is shown in the trading interface after selecting a contract. Deribit clearly places a strong emphasis on security and has never been hacked in its more than three years of operation.
OKEx is a Malta-based cryptocurrency exchange and futures trading platform that supports a huge variety of coins. On OKEx, users will find a range of futures, perpetual swaps, and options, some of which can be traded with up to x leverage. As it stands, OKEx is among the most popular exchange platforms, and currently serves more than 20 million customers in over countries. Unlike most Bitcoin exchanges, OKEx offers both spot and derivatives trading functionality and supports a wide variety of different cryptocurrencies and tokens.
Users can also deposit through wire transfer or credit card to buy Bitcoin and other cryptocurrencies with fiat at reasonable prices. Additionally, OKEx has some of the lowest fees in the market—with a 0.
These can be reduced for higher volume traders and OKB token holders. The website is relatively easy to navigate, and the spot, futures and perpetual swaps platforms are all accessible to beginners and experts alike.
Customer support is also readily available, since OKEx offers both phone support and email-ticket support, in addition to a well-polished help center.
Overall, the platform is considered an extremely safe place to trade Bitcoin, as the exchange has never been hacked—using a combination of cold storage wallets and distributed server clusters to stay that way.
Widely recognized as the most liquid spot exchange, Binance also offers a hugely popular futures trading platform, which offers 11 different perpetual futures, covering most popular cryptocurrencies in addition to some unique ones, including Chainlink LINK and Stellar XLM. Binance was founded in by Changpeng Zhao and Yi He, two innovators experienced with trading systems. Binance offers a wide range of products and services, including a staking and lending platform , spot exchange, and a rapidly expanding futures platform.
A clean and intuitive trading interface is crucial and Binance definitely got the memo. The exchange has a beginner-friendly UI and a simple to use mobile app. The website is also available in numerous different languages and offers simple, but responsive support through live chat and an internal ticket system.
Although Binance has been hacked in the past, the exchange covered all the losses using its Secure Asset Fund for Users, demonstrating impressive integrity and commitment to its users.
Nonetheless, the platform still keeps the majority of user funds in cold storage and offers a wide variety of account security options. Binance uses a VIP system to calculate fees. If an investor times it right, there could, at least hypothetically, be major profit to be had by leveraging the Bitcoin Futures market.
Bitcoin futures also—counterintuitively—don't involve holding any Bitcoin whatsoever. Instead, it simply involves trading Bitcoin at a future, pre-agreed upon date, whatever the price at that time may be. Bitcoin futures are settled with cash. Because no active Bitcoin trading takes place in a futures market, agreements are satisfied by trading at future, pre-agreed prices.
Another oft-cited advantage of the Bitcoin futures market is that the possibility of settling in cash means that no complex software or technological expertise is really necessary in order to get involved in this arena. Futures and their value are in constant flux, so there are plenty of opportunities for a savvy investor to short on their Bitcoin future at any time. For example, say the Bitcoin market is in the middle of a esque crypto winter.
An investor can continue to repurchase their future, and then conceivably generate a profit for themselves. Bitcoin futures are traded on several platforms. Taking on a contract is a serious obligation, and if it reaches its expiry date, the trader has a legal obligation to fulfill it. Futures could lose you a lot of money, as you could be forced to buy Bitcoin way above its current trading price.
Cryptocurrencies are one of the most volatile asset classes available; as with all cryptocurrencies, trading Bitcoin is very risky. The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice. Read on the Decrypt App for the best experience. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools.
The first thing to know about how to trade bitcoin futures is that no bitcoins are involved. In other words, since the futures are contracts that settle financially in cash, no bitcoin actually changes hands. As in other futures contracts, you speculate on the price of bitcoin and not buying or selling the underlying cryptocurrency asset itself.
No cryptocurrency trading platform or wallet is needed. This is because futures contracts either settle financially on the delivery date or are offset by traders reversing out of their positions as the delivery date approaches. If the buyer or seller of a bitcoin futures contract holds the position and shows a profit on the delivery date, then the difference between the purchase price and the settlement price is paid out to the holder of the futures contract.
This aggregates activity in Bitcoin trading across major bitcoin spot exchanges between 3 p. CST Sunday through Friday. An hour of inactivity between 4 p. The listing cycle for the bitcoin futures contract is the March quarterly cycle, consisting of March, June, September and December, plus the nearest two serial months not in the March quarterly cycle.
The last day of trading is the last Friday of the contract month. Trading in futures set to expire terminates at 4 p. GMT on the last day of trading. How to trade bitcoin futures is just as important as where you trade, so make sure you pick the right broker. To start trading futures , you must first open an account with a registered futures broker where your account can be maintained and your trades guaranteed.
Futures brokers are generally known as either a futures commission merchants FCMs or introducing brokers IBs. For starters, bitcoin futures have very high margin requirements. While margin offsets can be obtained with other CME financial products, the exchange does not offer them initially to new traders. Keep in mind that the margin requirements mentioned above are the CMEs; an FCM may have higher margin requirements depending on the market and the trader.
Other considerations consist of how closely the futures prices track the spot price, the liquidity in the market and how other traders and market makers are positioned. Developing and implementing a trading plan could be the most important thing you do to further your trading career.
Base your trading plan on careful analysis of the market you plan to trade in. As you develop your trading plan, consider what your objectives are for each trade , the amount of risk you plan to take on a trade and how much risk is acceptable for each trade. Other factors include the technical and fundamental analysis indicators you plan to use to generate buy and sell signals, the types of orders you plan to use and the way you plan to monitor the market and price developments.
Money management and position sizing must also be considered when trading in the volatile bitcoin futures market. An experienced and professional firm as your futures broker can make a significant difference in your overall long-term success. Try several brokers to find the one that suits your needs.
It offers an intuitive interface and features streaming quotes, technical analysis tools and full order desk communication as well as a mobile option. TD Ameritrade offers trading in bitcoin futures through its recently acquired thinkorswim subsidiary.