Home cryptocurrency Cryptocurrency future trading-all you need to know (Risk, Leverage, How it works, pros and Cons)

Cryptocurrency future trading-all you need to know (Risk, Leverage, How it works, pros and Cons)

by Abbey

Are you still new to future trading? Then it’s wise to first learn more about trading future in cryptocurrency. The fact is that it’s a completely different world than normal crypto trading (spot trading), and it involves a lot more risks. Make sure you know what these risks are.



With futures, you are gambling on a price rise or fall. This means that you are not actually buying a crypto currency in the hope that it will rise in value. With a future, you are not buying a crypto currency, but a contract. This contract states whether you expect a price rise or fall.

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Do you think the price of Bitcoin is going to rise? Then you go long, and you will make a profit if the price is actually going to rise within the prearranged time frame.

Or do you think the price of Bitcoin is going to fall? Then you go short, and you will make a profit when the price will actually drop within the prearranged time frame.

Such a contract is concluded for a specific period of time. So you decide in advance when you will buy or sell Bitcoin (or Ethereum).

What is cryptocurrency futures trading leverage

In addition, it is also possible to take a leverage. This is a leverage with which you can take your position even stronger. You can choose to strengthen your position with 2, 5, 10, 25, 50 or 100x. Thus you can increase your profit. The same goes for the loss you can make. A leverage ensures that your loss or profit is much greater than the actual price rise or fall.

How does Taking a loss on a (crypto) Bitcoin future work?

The moment your position reaches the stop-loss limit, the position is closed and you take your loss on a future.

To make this easy to explain, let’s take a quick example.

Suppose you buy a short future contract for Bitcoin at a value of $30,000 with 10x leverage because you expect the price of Bitcoin to fall. When that happens and you grab a return of $1,000, it means that you end up paying out this amount x10, which amounts to $10,000. The same is also true when you take a loss.

Should you have set a stop-loss at a price of $31,000, this position is automatically sold when it touches this price. You will then have lost $1,000, and due to the leverage the loss will eventually amount to $10,000. You can imagine that this can be very disadvantageous.

The advantages and disadvantages of futures cryptocurrency trading (Pros and Cons)

There are several advantages and disadvantages to futures. It is important to make yourself aware of the pros and cons before you actually start using and investing on futures cryptocurrency trading.

Benefits of futures (Pros):

  • The fees you pay for future trading are often lower than the costs of spot trading.
  • You don’t actually have to buy a coin to make a profit (or loss) on it.
  • With less money you can achieve a higher return by using leverage.

Disadvantages of futures (Cons):

  • Due to leverage, you can lose more money than the value of your bet.
  • Future trading is more difficult to understand and learn than spot trading.
  • The leverage ensures that a price change has much more effect on the positions taken.
  • Relatively speaking, more money is lost with future trading than with spot trading.

Warning about the use of futures Crypto trading (All you need to know)

I cannot publish this article without warning you about the use of futures. This is because the use of futures and investing involves a great deal of risk. This is due to the leverage effect, which ensures that you can lose more money than the money you have deposited.

Most people who lose money in crypto future trading did not know beforehand what they were actually putting money into. By gaining knowledge about the product you are investing in, you can decide why and when it is wise to put money in.

That’s why it’s important to be aware of the financial products you’re investing in. This has always been important, but is especially important when it comes to trading futures in cryptocurrency.

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