Futures trading, known as Contract trading, is buying and selling standardized Futures contracts. By trading in Futures, you can take part in market movement and profit by going long or short with a Futures contract while amplifying your gains using leverage. A trader could long a Futures contract, predicting the rise in value, or oppositely short a Futures contract if he believes the price will decline in the future.
1. How Does Futures Trading Work?
Unlike Spot trading, in which the exchange between an underlying asset (tokens) and money (USDT in most cases) happens when the order gets executed, Futures trading is conducted with the price prediction in the future. It’s not necessary to hold a cryptocurrency to start Futures trading. Thus, traders may find it more flexible and easier to handle.
As mentioned above, whenever a trader participates in Futures trading, he can either open a long position or a short position based on his belief that the price is going up or down in the future. Therefore, risk management is vital in managing Futures positions. Though your gains could be amplified by leverage, your losses could also be amplified if the price is against your favor.
2. What Is a Futures Contract?
Generally speaking, a Futures contract is an agreement to buy or sell a commodity, currency, or other instruments at a predetermined price at a specific time in the Future. They can be either physically settled or cash-settled. KuCoin Futures offers several of its trading products in the form of Futures contracts with a cash settlement.
In KuCoin Futures, the Futures contracts are divided into Perpetual contracts and Delivery contracts based on the delivery dates (Delivery contracts are settled on a specific date, while Perpetual contracts are settled every 8-hour window). They’re also grouped into USDT-Margined and COIN-Margined contracts on the basis of the settlement coins. For more references, check these Contract Types in KuCoin Futures tutorial.
3. Top Advantages of Futures Trading in KuCoin Futures
Main features of KuCoin Futures:
- Risk hedging: By selling/shorting a Futures contract, users can hedge against downside risk from the Spot trading market. Forget the market volatility.
- Two-way profit: Buy/sell a Futures contract to go long or short to earn a profit from both uptrend and downtrend. Plus, the funding fee is covered based on the price gap between the Spot and Futures market.
- Higher leverage: Up to 100x leverage on KuCoin Futures to magnify your profit with less funds. You can start trading BTC with only $1.
- Best choice for newbies: Exclusive Lite version makes every trading easier than ever, and newbies can get quickly started within 3 steps. Also, Futures Brawl is here to offer an enjoyable trading experience.
- Diversified contract and order types: Both Coin-Margined and USDT-margined contracts supported, and a wide range of order types are available to meet various trading needs.
- Leading indexing algorithm and top 3 trading depth: No fear for drastic fluctuations in the market. Additionally, airdrop bonuses are offered for every new user to start trading for free.
Furthermore, users don’t need to borrow from others when participating in Futures trading, making it more efficient and easier to get started. But there are things that need to know before trading, such as volatility and risk. Check the 10 Principles of Futures Trading in KuCoin Futures for more details.