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What are Futures in Trading?

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The market of digital assets has proved to be the most unstable and profitable in terms of investments and trading. Even when the market is down, many people strive to buy cryptocurrency expecting the following market growth, which is supposed to be in 2023.

Long-term investments are good for beginners because they give them enough time to analyze the market. Experienced investors use more complex trading tools, which are riskier and require more experience and skills. One of the most challenging financial tools proposed on large crypto exchanges is futures crypto trading. Let’s talk about it.

Trading of Futures – How Does It Work?

Future Possibilities

Actually, the future is a widespread tool in traditional markets. Futures are applied to different commodities such as precious metals, gas, grains, etc. The futures work principle is forecasting the price of an asset in the future and betting on it. For example, a trader researched and estimated that the asset’s cost would grow 10% in a month.

So he buys a future agreement, expecting the asset’s price to grow. If the forecast is correct, he will receive a profit once the futures contract ends. If not – the trader fixes losses. Another situation is when the trader believes the price will drop and sells his coins to buy coins back at a lower value when the contract expires. In both cases, thorough research plays a key role. There are two types of analysis:

  • Technical research – crypto charts, historical indicators, patterns, candlesticks, etc. To do this research, the trader must understand how to read crypto graphs and build price predictions based on the information received.
  • Fundamental research covers all external factors that may affect the asset’s future price.

An essential component of successful futures crypto trading is choosing a platform that allows this option. We recommend using large and reliable exchanges with official registration, such as WhiteBIT and Binance. They offer the best conditions for trading and convenient tools. The WhiteBIT cryptocurrency trading platform has perpetual futures, meaning contracts have no expiration date. Learn more about it on the WhiteBIT blog.