Cryptocurrency futures trading will help beginners get the gist of everything about their trade. Bitcoins are the foremost cryptocurrency that uses blockchain technology and are the most traded digital currency today. The blockchain is a decentralized system where nodes or computers validate transactions on the network. It also means that no one computer owner can disrupt a transaction or cancel the same. Again, no outsiders or participants can form a bias for a particular transaction without others falling in line, and therefore pretty impossible for hacks to operate.
Futures allow investors to hedge their risks against market volatility. It is an agreement between one selling party and another buying party to fix a price for a future date. Despite the wild fluctuation in cryptocurrency prices, both parties will keep the agreed price binding when the contract date expires. To trade in bitcoin futures, you may need to open an account with an exchange like here https://www.btcc.com/.
How is Bitcoin Futures Traded?
Futures are financial derivative contracts, and parties entering into a contract buy or sell the cryptocurrencies at a predetermined price and date. It means the buyer must purchase the cryptocurrency at that predetermined price while the seller must sell the same at that price, regardless of the market price on the expiry date.
If you are a beginner or a person with good knowledge of cryptocurrency, you must register your name and open an account with one reliable exchange. You would need to deposit a margin amount, which is usually calculated as a percentage of the total contract value. The margin may vary according to the exchange you choose to transact. In bitcoin Futures Trading, you can take advantage of depositing a small margin and exposure to a large value. In this way, you can leverage and bet on larger profits, although you may also suffer huge losses
on the flip side.
It is noteworthy that the greater the volatility of a particular cryptocurrency in the market, the greater the initial margin of money. In the case of bitcoin, the volatility is not huge, and hence you may need to provide only the minimum margin. With the help of a good and authentic cryptocurrency, you can get tips and suggestions that can help you reduce your risks.
Settling of Cryptocurrency Futures Contract
You may settle the futures contract on the expiry date, and the broker or the exchange will debit or credit the premium you have paid on the bitcoin. However, you needn’t hold on to your futures contract till the expiry date. If you decide to exit, you can, and your broker will adjust your losses or profits against the margins you have deposited. However, you may not square off your position till the contract expires.
You can therefore cancel out your bitcoin Futures Trading position, and all you need to do is enter the opposite type of trade, and the contract is automatically removed. For example, if you are in a long contract on a buy order, this closes the trade when you place a sell order.