Large crypto trading platforms offer a variety of tools for users to make a profit. One of the most complicated yet profitable tools allowing generating income even on the downward market is crypto futures. In this article, we will discuss how this trading method works.
Many beginner traders wonder is trading futures profitable. Indeed, it is a very profitable way of making money, but one condition – understanding of the market and experience.
The Essence of Trading Crypto Futures
Such contracts are made between parties, where they specify the exact date and value of an underlying asset. This trading method is similar to speculation. Let’s see how it works in practice:
- Let’s imagine that you did market research and feel confident that the value of crypto will boost. You buy the asset now and claim its rate and the deadline you owe to sell it.
- When the contract’s date expires, you check out the crypto value. If it really increases as much as you thought, you sell crypto and receive a profit.
And another situation is when you think the price will drop:
- You believe the crypto rate will drop. So you claim the rate and the date in the contract.
- When the day comes, you purchase coins at a reduced price.
These two versions are called “long” and “short”. In such a way, you can earn on both the growing and falling market.
A crypto futures contract does not necessarily mean that you must buy coins right away. You buy a contract and multiply your crypto holdings if your price prediction is correct.
It is essential to conduct quality market research for this trading type. You have to be able to assess further price movement and make forecasts correctly. It requires theoretical knowledge as well as a lot of practice.
WhiteBIT Demo Account
The WhiteBIT exchange offers the option to practice different strategies and tools using demo tokens. The tokens can’t be lost or deposited, so users should not worry about making mistakes in demo trading. A demo account allows to understand all the details of futures trading, use different sizes of leverage, and find all the pitfalls and gaps to improve.
To learn more about this type of trading, visit the WhiteBIT blog, where you will find many valuable articles and guides.