For many, the article about spot or futures and how to start has sparked a storm of comments. Thank you for reading and discussing!
What are futures in cryptocurrency and how to work with them?
Futures are an instrument that allows you to profit from the price changes of cryptocurrencies, even if you do not own the coin itself. You predict whether the price will rise or fall and make a profit (or loss) depending on the accuracy of your prediction.
How does it work?
Futures are a contract for the price change of a cryptocurrency. You choose:
- Long (long position): You think the price will rise.
- Short (short position): You think the price will fall.
If your prediction is correct, you earn. If you are wrong — you lose.
Leverage (separate article available on this topic)
This is a "credit" from the exchange that increases your position.
For example:
- You have $10.
- You take 10x leverage.
- Now you trade as if with $100.
‼️ Important: Leverage amplifies both profit and risk. If the market goes against you, you can quickly lose money.
❗️Key terms❗️ (I will discuss this topic separately in future posts)
📌 Margin: The amount you invest in the trade. This is your collateral.
📌 Liquidation: If the price changes significantly in the opposite direction, the exchange will close the trade and take the margin.
📌 PNL (profit and loss): The result of a trade in money.
Example of a trade (BTC $94,455)
1. You believe that the price of BTC will rise. The current price is $94,455.
2. Open a long position with 5x leverage on $10.
3. If the price rises to $96,344 (+2%), your profit will be:
- 2% × 5 = 10% of the position, or $1.
4. If the price drops to $92,566 (-2%), your loss will be:
- 2% × 5 = 10% of the position, or $1.
Risks and managing them
Futures are a risky instrument. To minimize losses:
1. Set a stop-loss. This is an automatic closure of the trade when a certain loss is reached.
2. Do not use high leverage. For beginners, it is better to stick to 2x–3x.
3. Only risk a small part of your capital. Ideally — no more than 1–2% per trade.
Who are futures suitable for?
- For those who already understand the market and can analyze charts.
- For those who are ready to take risks and learn.
- They are not suitable for unprepared beginners.
🔖 Master the basic strategies:
- Trend trading: Earn by following the market movement.
- Scalping: Quick trading on small price changes.
Futures can be profitable, but they come with high risks. The main thing is to start small, learn, and always control your losses.
