Futures basics - learn about trading futures contracts on the Kraken exchange

The cryptocurrency market is evolving at a dizzying pace, and with it the tools investors use. While spot trading remains the foundation for many people, futures have become the engine that drives global trading volume. Why? Because they offer flexibility that is not available to digital coin holders – the ability to earn on inheritances, financial leverage and advanced hedging strategies.

In this guide, we’ll walk you through the basics of derivatives trading on Kraken – from understanding the mechanics of contracts, to the differences between the spot and futures markets, to specific risk management principles and technical analysis.

What are futures contracts and how do they work?

In simple terms, a futures contract is an agreement between two parties to exchange the value of an asset in the future at a specific price. The key word here is “value” – when trading futures, you are not buying Bitcoin that goes into your wallet. You are purchasing a promise of automatic settlement of the price difference in the future.

Where can I find futures contracts on the Kraken platform?

Here’s a simple guide to navigating the Kraken Pro platform to trade the futures markets.

Click “Trade Futures.”

Select the market you are interested in – crypto or TradFi.

Use the technical analysis indicators you prefer and change the view from simple to advanced in the upper right corner to go to the order panel.

In the order panel, select the type of order you are interested in.

Types of orders on Kraken pro – guide

Basic orders

Market: This is the simplest “buy/sell now” order. Kraken fulfills them immediately at the best price currently available. It’s great when you need to get in or out of a position quickly, but you don’t have control over the exact price, which can be risky with high volatility.

Limit: Here you manage the price. You tell the exchange: “Buy Bitcoin, but only if the price falls to X” or “Sell when it rises to Y.” The order goes into the book and waits until the market reaches your price. If the price level doesn’t get there, the deal won’t happen.

Defense orders and profit taking

Stop loss: Your insurance policy. This is a “rescue” order that will automatically close your position if the market goes in the wrong direction. If you bought crypto at, say, $60,000, you could set a Stop Loss at $58,000 to limit your loss if the price started to drop dramatically.

Take profit: The opposite of Stop Loss. It is used to automatically record profit. You set a target price (e.g. $65,000) and when the market reaches it, the exchange sells your assets, allowing you to enjoy your earnings without waiting in front of the monitor.

Stop loss limit / Take profit limit: These are more precise versions of the above orders. Instead of selling at any price after crossing the threshold (as in a regular Stop Loss), you also set a “limit”, which is the worst price you are willing to accept when exiting the market. This gives you more control, but during a market crash there is a risk that the price will “overshoot” your limit and the order will not be executed.

Follower orders

Trailing stop: This is an intelligent Stop Loss that “tracks” the price. If the price of your asset increases, the Trailing Stop moves up with it at a distance you specify (e.g. 5% below the market price). However, if the price starts to fall, the order remains in place. This allows you to maximize your profits in an uptrend while protecting what you have already earned.

Trailing stop limit: It works identically to Trailing Stop, but when activated it does not become a market order, but a limit order. This means that you set a firm price frame at which you want to exit your position, which protects you from selling too low in times of extreme chaos in the stock market.

Contract mechanics – Long vs. Short

Imagine the futures market as an arena where two groups with opposing views meet:

Bulls (long/long position): Traders who believe that the price will increase. They buy the contract now, hoping that the market price will be higher at settlement.

Bearish (Short position): Traders betting on declines. They “sell” a contract they do not own with the intention of buying it back cheaper in the future.

If your prediction comes true, you profit from the difference between the entry price and the closing price. Importantly, platforms such as Kraken Pro act as a guarantor – they connect both parties and ensure that the “loser” pays the “winner” 100%.

Spot and Futures Market – key differences

Understanding the difference between these two worlds is critical for anyone looking to move beyond simple “buy and hold.”

Characteristic	Spot Market	Futures Market
Property	You have real assets (e.g. BTC in your wallet).	You have a contract (derivative).
Lever	Typically none (or limited).	High (often 5x to 50x).
Profit direction	You only profit when the price goes up.	You profit from increases and decreases depending on your position.
Costs	Transaction fees (maker/taker).	Transaction fees + financing rates.

Get to know TradeFi Futures

Kraken is a unique platform that combines the crypto world with professional financial instruments. Currently, traders have two main types of products at their disposal:

Perpetual futures

It is the most popular instrument in the crypto world. As the name suggests, these contracts have no expiration date.

Funding rate mechanism: To ensure that the price of a perpetual contract does not deviate too far from the spot price, a financing rate is used. If the majority of the market wants to buy (longs), they pay a small premium to those who sell (shorts).

Fixed-term futures

Mainly available through the NinjaTrader platform (powered by Kraken), these are traditional CME-style contracts. They have a specific expiration date (e.g. last Friday in September).

There are no funding payments, which makes them a good tool for long-term hedging.

Case Study: Hypothetical futures transaction step by step

Let’s analyze a specific market scenario on Kraken Pro to understand how capital works in a leveraged environment.

Scenario: Speculation on Bitcoin’s growth (Long)

Let’s imagine that the price of Bitcoin (BTC) is currently $60,000. You analyze the market and come to the conclusion that the price will increase by 10%.

Your capital (Margin): USD 2,000.

Selected leverage: 10x.

Position value: USD 20,000 (equivalent to 0.333 BTC).

You enter the Long position. Your USD 2,000 is blocked as a security deposit.

Option A – market success

BTC price increases by 10% to $66,000.

0.333 BTC × $66,000 = $21,978

Your gross profit is $1,978.

ROI: Almost 100% profit with a price movement of 10%.

Option B – liquidation risk

BTC price drops by 10% to $54,000.

The item value drops to $17,982.

The loss is $2,018 – since it exceeded your deposit, the position would be liquidated (closed by the exchange).

Trading psychology – a balanced approach to the futures market

Contract trading is much more mentally taxing than spot trading. On futures, a wrong decision can lead to the balance being wiped out much faster than on the spot market.

The Overleveraging Trap

The most common mistake is to use 50x or 100x leverage. With this setup, a 1-2% price movement against you results in liquidation. Most professional traders rarely exceed 3x-5x leverage. Safety should always be a priority.

Revenge Trading

After a painful loss, there is a desire to “get back.” The trader opens another position under the influence of adrenaline and anger. This is the shortest path to bankruptcy. The key is discipline and sticking to the plan:

Take Profit: Where will I make a profit?

Stop Loss: At what point will I exit my position and close the loss?

Technical analysis for futures

Successful trading on Kraken Pro requires efficient use of indicators, especially when trading short-term – here are some examples worth paying attention to.

RSI (Relative Strength Index)

The relative strength indicator helps identify moments when the market is overbought (above 70 points) or oversold (below 30 points).

Bollinger Bands

They measure market volatility. Tapering bands often herald a sharp price move – the perfect time for a futures trader to take a position before a breakout.

Open Interest (Open positions)

This is a futures-specific indicator. Informs about the number of active contracts. The increase in price along with the increase in Open Interest confirms a strong upward trend (new capital goes into long terms).

Summary – responsibility is a priority

Kraken Pro futures contracts are a tool that allows you to effectively manage your capital and play in all market conditions. But remember about responsibility – start with small positions, understand the leverage mechanism and use defensive orders.

Disclaimer: This article is for informational and educational purposes only. It does not constitute investment, financial or legal advice. Investing in digital assets involves high risk and high volatility. Before making any investment decisions, you should conduct your own analysis (DYOR) and seek advice from an independent specialist.