Crypto is more than just another asset class. It’s a 24/7 market that never sleeps, offering traders unmatched access and opportunity. With volatility comes risk, but also reward; the kind of dynamic movement professional traders look for every day.
Unlike stocks that close at 4 PM or forex that slows on weekends, crypto offers nonstop price action and unmatched liquidity. For traders from traditional markets, it’s the natural next step to sharpen your skills and grow your edge.
Crypto futures are contracts that allow traders to speculate on the price of a cryptocurrency without owning it directly. Instead of buying or selling the coin itself, you enter into an agreement to exchange it at a future price.
| Feature | Crypto | Forex | Futures (Traditional) | Stocks |
|---|---|---|---|---|
| Market | Decentralized | Centralized | Centralized | Centralized |
| Trading Hours | 24/7 | 24/5 | Varies by exchange | Varies by exchange |
| Volatility | High | Moderate | Moderate | Generally lower |
| Leverage | High | High | Moderate | Varies by broker |
| Liquidity | Varies by exchange | High | High | Varies by stock |
| Settlement | Cryptocurrency | Physical delivery | Cash or physical delivery | Cash |
| Term | Crypto | Forex | Futures (Traditional) |
|---|---|---|---|
| Margin | Collateral to maintain open positions | Initial deposit to open a position | Good faith deposit to open a position |
| Funding Rate | Used to adjust the price of perpetual contracts | N/A | N/A |
| Liquidation | Occurs when margin level falls below a certain threshold | Occurs when account balance falls below margin requirement | Occurs when margin level falls below a certain threshold |
| Settlement | Cryptocurrency or stablecoin transfers | Physical delivery of currency | Cash or physical delivery |
To effectively navigate the crypto futures market, it's crucial to understand the various order types at your disposal.
Market orders are executed immediately at the best available price in the market. They guarantee execution but not price.
Limit orders allow you to specify the exact price at which you want to buy or sell. The order will only execute at your specified price or better.
Stop orders are triggered when the market reaches a specified price level. Once triggered, they become market orders and execute at the best available price.
Stop-limit orders combine features of both stop and limit orders. When the stop price is reached, a limit order is activated at the specified limit price.
Trailing stop orders adjust automatically as the market price moves in your favor. They maintain a fixed distance or percentage from the market price.
Contract specifications define the standardized terms and conditions of futures contracts. Understanding these specifications is essential for effective trading.
Contract size refers to the amount of the underlying asset represented by a single futures contract. In crypto futures, this can vary significantly between exchanges and contract types.
Example: A Bitcoin futures contract might have a size of 1 BTC, 0.1 BTC, or even $1 USD of Bitcoin (in the case of quanto contracts).
Traditional futures contracts have specific expiration dates when the contract must be settled. However, crypto futures often include perpetual contracts that don't expire.
Tick size is the minimum price movement of a futures contract. Tick value is the monetary value of a one-tick move.
Example: If a Bitcoin futures contract has a tick size of $0.50 and a contract size of 1 BTC, then a one-tick move represents a $0.50 change in value per contract.
Understanding these fundamental concepts is crucial for successful crypto futures trading.
Leverage allows traders to control larger positions with a relatively small amount of capital. Margin is the collateral required to open and maintain leveraged positions.
Funding rates are periodic payments exchanged between long and short traders in perpetual futures contracts. They help keep the perpetual contract price aligned with the spot price.
Liquidation occurs when a trader's margin balance falls below the maintenance margin requirement. The exchange automatically closes the position to prevent further losses.
Example: If you open a $10,000 position with 10x leverage (using $1,000 margin) and the market moves against you by 9%, your position would be close to liquidation as your losses approach your initial margin.
At CoinProp, we’re focused on crypto trading. We don’t offer traditional forex or equity futures. Instead, we believe crypto perpetual futures are the ultimate vehicle for traders with FX or futures backgrounds.
Forex vs. FX Futures
Both involve trading one currency against another. But unlike spot forex where brokers often control pricing, FX Futures are exchange-traded, meaning price discovery is set by the market, not the broker.
Crypto Perpetual Futures
These work similarly to FX Futures but track crypto assets like Bitcoin, Ethereum, and many altcoins. They offer the same professional structure and transparency while giving traders access to the fastest-moving market in the world.
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