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Are you based in the US and want to trade cryptocurrency futures? In this blog post, we’ll show you how to do it.
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Introduction
Crypto futures trading gives investors the opportunity to speculate on the future price of digital assets, without having to own the underlying crypto tokens. Crypto futures contracts are traded on regulated exchanges and can be bought and sold through brokerages. In the US, some of the major exchanges that offer crypto futures contracts include Bakkt, LedgerX, and ErisX.
What areCrypto Futures?
A crypto future is a type of derivative contract that allows traders to speculate on the future price of a digital asset. Crypto futures contracts are traded on regulated exchanges and can be bought and sold through brokerages. In the US, some of the major exchanges that offer crypto futures contracts include Bakkt, LedgerX, and ErisX.
Crypto futures differ from traditional financial futures in a few key ways:
-They are settled in cash, not the underlying asset. This means that if you are long a Bitcoin future and the price of Bitcoin increases during the contract period, you will receive cash settled in US dollars when the contract expires. Similarly, if you are short a Bitcoin future and the price of Bitcoin decreases during the contract period, you will pay cash settled in US dollars when the contract expires.
-They offer leverage. With most crypto futures contracts, traders can enter into positions with leverage of up to 100x. This means that for every $1 you have in your account, you can control up to $100 worth of contracts. Leverage can magnify both your profits and losses so it’s important to use it wisely and only trade with money you can afford to lose.
-They have low fees. Crypto futures exchanges typically charge lower fees than stock or forex brokers. For example, LedgerX charges a flat fee of $10 per transaction while Bakkt charges a volume-based fee starting at $2 per contract.
How do Crypto Futures Work?
Crypto futures contracts are agreements to buy or sell a digital asset at a specified price at a later date. Futures contracts are traded on regulated exchanges and can be bought and sold through brokerages
What are Crypto Futures?
Crypto futures are derivative contracts that allow traders to speculate on the future price of a cryptocurrency. Futures contracts are standardized so that each contract represents a specific amount of the underlying asset, and they are traded on exchanges where traders can buy and sell contracts.
Crypto futures contracts can be used to hedge against risk or to speculate on the future price movements of a cryptocurrency. For example, if you think the price of Bitcoin is going to go up, you could buy a Bitcoin futures contract. If the price of Bitcoin goes up as you expect, you will make a profit on your contract. If the price of Bitcoin goes down, you will lose money.
Crypto futures contracts are usually traded with leverage, which means that you can trade with more money than you have in your account. Leverage allows you to make bigger profits (or losses) than you would otherwise be able to, but it also increases your risk.
What is the Difference Between Futures and Options?
There are two major types of derivatives: futures and options. Both types of contracts derive their value from an underlying asset, which can be anything from stocks and commodities to currencies and cryptocurrency. The key difference between futures and options is that with futures, you are contractually obligated to buy or sell the underlying asset at a set price at a future date, while with options, you have the right but not the obligation to do so.
How to Trade Crypto Futures
You can trade crypto futures in the US through a regulated exchange such as the Chicago Mercantile Exchange (CME) or the Chicago Board Options Exchange (CBOE). These exchanges offer contracts for bitcoin, ether, and other digital assets. You can also trade crypto futures on some less regulated exchanges such as the Kraken Futures exchange.
To trade crypto futures, you will need to open an account with a broker that offers access to the exchange where you want to trade. For CME contracts, for example, you can use a broker like TD Ameritrade. Once you have an account set up, you can fund it with US dollars or cryptocurrency and then start trading.
When trading crypto futures, you will be taking a position on the future price of the underlying asset. If you think the price will go up, you can buy a contract; if you think it will go down, you can sell a contract. Contracts are traded in units of bitcoin or ether, and each contract has a specific expiration date.
Before trading crypto futures, it’s important to understand the risks involved. Futures contracts are leveraged instruments, which means they can result in losses that exceed your initial investment. You should also be aware of potential issues with liquidity and price volatility.
If you’re interested in trading crypto futures, make sure to do your research and choose a broker that’s right for you.
The Benefits of Trading Crypto Futures
Cryptocurrency futures offer several benefits when compared to other types of cryptocurrency trading. These benefits include:
-The ability to trade onmargin, allowing traders to enter into larger positions than would be possible with spot trading;
-The ability to go long or short on a particular cryptocurrency, providing opportunities to profit from both rising and falling prices;
-The potential for lower transaction costs when compared to spot trading;
-The availability of leverage, allowing traders to enter into larger positions than would be possible with their own capital;
-The ability to hedge against existing spot holdings, mitigating the risks associated with holding cryptocurrency.
One of the main benefits of trading cryptocurrency futures is the fact that traders can choose between going long or short on a particular asset. This means that traders can profit from both rising and falling prices. In addition, cryptocurrency futures offer the potential for lower transaction costs when compared to spot trading. This is because there is no need to pay for the underlying asset when entering into a futures contract.
The Risks of Trading Crypto Futures
Before we dive in, it’s important to understand the risks associated with trading cryptocurrency futures. As with any speculative investment, there’s a chance you could lose money when you trade crypto futures.
Here are a few of the key risks to keep in mind:
-Volatility: The price of cryptocurrencies can be highly volatile, which means that the value of your investment can go up or down significantly in a short period of time. If you’re not careful, you could end up losing all of your money.
-Leverage: When you trade crypto futures, you’re usually able to trade with leverage, which means that you can control a larger position than the amount of money you have invested. This can help you make more money, but it can also magnify your losses.
-Liquidity: Cryptocurrency markets are still relatively new and they don’t have the same level of liquidity as other financial markets like stocks or forex. This means that it can be harder to buy or sell your position when you want to, and you may have to accept a lower price than you were hoping for.
-Counterparty risk: When you trade crypto futures, you’re entering into a contract with another party (usually an exchange). This means that there’s a risk that the other party won’t fulfill their obligations under the contract.
– Regulatory risk: Cryptocurrencies and cryptocurrency exchanges are not currently regulated in most jurisdictions. This means that there’s a risk that regulations could change in the future, which could adversely affect the value of your investment.
Conclusion
If you’re looking to trade crypto futures in the US, there are a few things you need to know. First, you’ll need to find a broker that offers crypto futures trading. Second, you’ll need to open a futures trading account with that broker. And third, you’ll need to fund your account and begin trading.
Fortunately, the process of opening a crypto futures trading account is relatively straightforward. You can typically do it all online in just a few minutes. And once your account is open, you can begin trading right away.
So if you’re interested in trading crypto futures in the US, there’s no reason to wait. Get started today and see how easy it is to get started.
