Outside Binance, Futures, in general, have been around for over 100 years. To be precise, crypto futures trading went into full-blown action at the end of 2017. Since that time, a lot of exchanges have indicated an interest in crypto futures. Why all the attention? By the time you are finished with this content, you will understand the efficiency of this innovative method of crypto investment.
Two unique features of futures are:
- They are one of the most traded crypto derivatives
- They encompass a large number of long-standing derivatives.
If you’re reading this as an investor and your interest happens to be piqued concerning futures then be sure that there’s adequate knowledge or information to propel any move towards futures trading.
Now, what are futures?
Futures in the crypto world is what traders garner adequate exposure to digital currencies without actually possessing cryptocurrency. With, there’s no need to possess crypto to get in the game.
Think of it in terms of futures contracts involving commodities or stock indices to get a bigger picture. In this case, investors can take risks on the future value of an asset. Crypto futures will generate their value from certain gems such as Ethereum or Bitcoin. In the absence of not holding any cryptocurrency, traders use cash to deal in crypto in the event of the expiration of their crypto futures contract.
One primary advantage of trading futures is that traders are safe from the damages of highly volatile cryptocurrencies and price changes. On the other hand, this extreme volatility is what enables traders to buy digital assets when they are low for later sales when price changes cause their value to increase.
Crypto futures offer traders 24/7, 7 days a week trading and are available on Binance as Binance Futures which is a derivative trading platform. One thing traders and investors most note is that prudent is highly recommended when it comes to derivatives trading. Players must also digest the core basics of crypto futures before dipping their fingers in the pie.
Generally, digital gems are subject to many different challenges such as bad publicity, hyper volatility, etc. And a good number of crypto traders wield such developments to their advantage. The way futures work, a holder gets to take strategic, profitable risks on certain price changes while not holding the actual asset.
Here is a prime example of this. For instance, Greg and Hughes take on a futures trade with Ethereum at $20,000 each. Greg opted for a long position while Hughes secured an opposing trade.
After the expiration of the contract, the Ethereum futures price finished at $30,000. This means that Hughes, whose position was not on the gaining side, will have to remit the deficit loss to the Binance futures exchange at $10,000 ($30,000-$20,000). On the winning side, Greg made a sweet profit of $10,000.
Trading futures on Binance can be achieved in these five easy steps:
- Open a futures trading account on Binance
- Deposit funds in any cryptocurrency supported by Binance.
- Select your preferred futures contract.
- Place orders according to the various order types available on Binance.