The world of cryptocurrencies is not only buying and keeping Bitcoin in the hope of increasing price. It is also advanced financial instruments that allow speculation, hedging and maximizing profits. One of the most important tools in the arsenal of every serious trader are term contracts – instruments that can bring spectacular profits, but also well send an unprepared investor to the bottom.
If you think that Futures contracts are something for Wall Street and big corporations, you are wrong. Today, everyone can trade deadlines for cryptocurrencies from the level of their smartphone. The question is: are you ready/ready for this challenge?
Futures contracts – what is it?
Futures (timely) contracts are standard contracts obliging to buy or sell a specific assets in the future, at a predetermined price. Sounds complicated? In practice, it’s like an appointment with a friend that you can buy a car from him for a month for PLN 50,000 – regardless of whether he will be worth 45,000 or 60,000 PLN.
In the world of cryptocurrencies, term contracts work identically. You can “make an appointment” today to buy one bitcoin per month at the price of USD 50,000, even if you don’t have this money now. This is the essence of Futures – trade in the future value of assets.
Important: Term contracts and Futures contracts are spare names – in this article I will use both terms alternately.
According to the definition of Investopedia, Futures contracts are “a standardized legal contract for buying or selling a specific goods or financial instrument at a predetermined price at a specific time in the future.”
Futures and trade contracts
The main difference between the trade in Spot and Futures is a matter of time and property property. Imagine you are going to the store for bread:
SPOT HANDLE It’s like buying bread in a store – you pay right away, you take the goods immediately and it’s yours. You buy Bitcoin for USD 50,000, the money disappears from the account, and Bitcoin appears in your portfolio.
Futures trade It’s like ordering bread for tomorrow – you only pay an advance (margin), but you will only receive bread tomorrow. You can also change your mind and sell your “reservation” to someone else before receiving. In the case of cryptocurrencies, you buy a Bitcoin contract, paying only part of the value, and the settlement takes place within a specified period.
Key differences:
- Property: In the spot you immediately become the owner, in Futures not.
- Capital: The spot requires a full amount, only a security deposit.
- Lever: Spot without lever, Futures with a lever up to 1: 100.
- Reckoning: Immediate spot, future in the future.
What are the timely contracts and how do the crypto work on the market?
Futures contracts in crypto are a game on large numbers with small capital. This is due to the financial lever, i.e. a mechanism that allows you to control positions with a value that significantly exceeds your real capital.
Here are a few concepts that you need to know on Strart:
- Financial lever It’s like a trade loan – the stock exchange “lends” you money so that you can trade larger amounts. The 1:10 lever means that with 1000 USD you can control a position worth USD 10,000.
- Margin This is a security deposit – some of your money “frozen” as a guarantee that you will meet the contract. It’s like a deposit for renting a car.
- Long position This is a bet for price increase – you buy a contract hoping that the act will be more expensive.
- Short position This is a price drop – you sell a contract hoping that the act will be cheaper.
- Liquidation This is an automatic closure of the position by the stock exchange when your losses are approaching the amount of the margin. This is a protective mechanism – if it wasn’t, you could lose more than you have.
Example: You open the Long position on Bitcoin with 1:10 lever. You pay 1000 USD margin, control your position for USD 10,000. If BTC increases by 5%, you gain $ 500 (50% of your capital!). But if it falls by 10% you will lose all a thousand.
Impact of Futures contracts on the cryptocurrency market
Futures contracts are not only a tool for traders, it is a force shaping the entire cryptocurrency market. The mechanisms you need to know this conango and backwarding.
Conango It occurs when the price of the Futures is higher than the spot price. This is a natural situation in which people pay premium for the possibility of buying in the future. Imagine that Bitcoin costs USD 50,000 today and a contract for December 52,000 USD. The market believes that BTC will be more expensive.
Backwarding This is the opposite situation – Futures are cheaper than spot. It is a signal that the market is expecting declines or there is a lot of pressure for sale.
Futures contracts affect the price of base assets through several mechanisms:
- Arbitration – If the price of Futures is significantly different from the spot, the arbitrator quickly level the difference, buying cheaper and selling more expensive.
- Hedging – Large companies use Futures to protect against price changes, which creates additional pressure on the market.
- Speculation – Futures allow trade with the lever, which intensifies the price movements. One big player can affect the price of the entire market.
- Psychology – Information about Futures positions (especially liquidations) affect the mood of other traders.
Futures on the Krypto Stock Exchange – how to buy?
Ready for the first steps with Futures contracts? It’s time to go from theory to practice. I show you how to start trading the Futures on the example of the Toobit exchange – one of the most friendly platforms for beginners.
Step 1: Registration on the stock exchange and account verification
Go to the official website of the stock exchange and create an account to toobit. The registration process is literally 2 minutes – you only need an email address and a strong password. Register here and use the welcome bonuses.
Then complete your personal data and verify the identity. It’s a safety standard – you won’t be able to trade Futures without it.
Step 3: Payment of funds
Pour the money to your account. You can pay FIAT (PLN, EUR, USD) by card or BLIK, or pour cryptocurrencies from another wallet.
Step 4: Going to the Futures section
In the main menu, find the “Contracts” tab. You can choose from several types, but it’s best to start with the basic position. Click and enter the world of advanced trade.
Step 5: Contract selection
Start with BTC/USDT – this is the most famous contract with the lowest spreads. You will see price information, volume and funding rate.
Step 6: position setting
- Select direction: Long (height) or short (decrease)
- Set the lever: for the beginning max 1: 5
- Enter the amount: Start with small sums, e.g. 50-100 USD
- Set STOP-LOSS: This is your safety network
Step 7: Item monitoring
Watch your position in the “Items” tab. You see PNL here (profit/loss), margin ratio and you can modify your position.
Example on BTC: The Toobit stock exchange offers perpetual contracts on Bitcoin with a lever to 1: 100. You can trade from 10 USDTs, which makes the futures available even to beginners. The spread is usually 0.01%and the liquidity is perfect 24/7.
⚠️ Risk warning: Trade of Futures contracts is associated with a high risk of loss of capital. Only use funds that will not affect your financial situation. Risk management is the basis of success in trading – without the right strategy, even the best traders end with losses.
FAQ, or what else do you need to know about borets for cryptocurrencies?
The following questions are the absolute “must know” – virtually every novice trader Futures asks them. If any of them died on your head, it means that you are on the right track to becoming a conscious investor.
How long can you have cryptococcanoe contracts for cryptocurrencies?
Traditional Futures contracts have a specific expiry date – usually the end of the month or quarter. But in crypto there are perpetual (eternal) contracts that have no expiry date. You can keep your position for weeks or months, but remember the Funding Rate – a fee calculated every 8 hours between Long and Short items. Sometimes it is better to close your position and open a new one than pay high funding for a long time.
What is the difference between the Futures contracts from Perpetual?
The main difference is the expiry date. Classic Futures have a specific settlement date (e.g. December 30, 2025), after which they automatically close. Perpetual (eternal) continues indefinitely, but they have a Funding Rate mechanism, which maintains the price close to the price of Spot. It’s like the difference between renting an apartment for a year (Futures) and rental for an indefinite period with monthly rental regulation (perpetual).
Futures a Forward contracts – what is the difference?
Forward is a “wild west” of term contracts – they are private contracts between two sides, without standards and warranty. Futures is their “civilized” version – standard contracts traded on stock exchanges, with guarantees and daily accounting. Forward is like a loan from a friend, Futures is a bank loan. In the crypto, we almost always deal with Futures, not Forward.
Where to buy Futures contracts for cryptocurrencies?
The Futures contracts market for cryptocurrencies in Poland is evolving with regulations, but still offers interesting opportunities for conscious investors. The key is to choose the right platform that combines safety with functionality.
Futures contracts are a powerful tool that can significantly increase your possibilities on the crypto market – provided that you approach them with appropriate knowledge and prudence. Start in small steps, learn from practice and remember about risk management.
Check Tobit – a platform that offers a complete solution for the Futures trade for cryptocurrencies. Competitive conditions, intuitive interface and support for Polish users make it an excellent choice to start adventure with futures.
Start your adventure with Futures contracts to TOobit – register and use the welcome bonus.
Remember: Trade of Futures contracts is not a way to fast wealth, but a tool that requires knowledge, experience and iron discipline. Start with small amounts, learn from mistakes and never invest more than you may lose.
