Crypto Futures Trading: Step by Step Guide

Nick Clair
Crypto Futures Trading: Step By Step Guide

The market of digital assets is extremely volatile, which on the one hand, brings many earning opportunities and on the other hand, bears high risks. Every trader picks a trading strategy that suits one the best. For example, some people are not ready to take a big risk and prefer to buy and sell digital coins quickly, taking possible profit from price changes. Other people prefer to buy and hold assets for a long time, patiently awaiting the market uptrend. Every person picks a trading strategy depending on one’s personal features and character. Some people are more impulsive and risky, ready to act, while others are less risky and prefer quiet trading if this term is appropriate in this highly volatile market at all.

One of the riskiest methods is crypto futures trading, and we would like to discuss it in more detail today.

What Is Crypto Futures Trading?

Crypto futures trading is an option for those traders who want to capitalize on market trends and are ready to take a risk. Unlike spot crypto trading, futures trading does not imply a trader buying and owning digital coins right away. Instead, the trader buys a futures contract where he claims the price of the asset and the date on which he will buy or sell this asset in the future.

How does futures trading work? Suppose a trader thinks that the digital asset (let’s take BTC) will rise to $20 000 in a couple of months. He made such a conclusion based on the previous analysis. So he wants to generate income from the BTC price growth and concludes a futures derivative agreement where he states he will sell BTC at a price of $20 000. If the digital asset’s rate really goes up, the trader succeeds. This method is called “long”.

A reverse situation is when the investor believes the BTC rate will drop. So he sells out his Bitcoins and concludes an agreement to purchase back BTC at a lower value. If it really goes down, the trader receives Bitcoins and makes money. This method is called “short”.

To make the correct forecast for future price movement, traders do a huge array of work:

  • Fundamental research. Implies the analysis of external factors that have an impact on the crypto market. That may be the overall situation with the world’s economy, crisis, wars, inflation, etc. Of course, the crypto scope depends on those factors, for they impact people’s ability to invest.
  • Technical research. It helps to understand how the coin’s rate reacts to market fluctuations based on how it behaved in the historical context. For that purpose, traders search for price indicators and historical patterns. They investigate candlesticks on charts, which is a whole science.
  • Quantitative analysis. Based on fundamental and technical research, traders come up with the calculation of indicators that help them understand the clear picture of the situation. Then the trader understands the future price movement and decides on the crypto futures trading strategy.

Crypto Futures Trading: Step By Step Guide

Why Invest in Cryptocurrency Futures?

Unlike spot trading, crypto futures trading gives a trader much wider opportunities and potential to capitalize and multiply one’s portfolio. Let’s see the main reasons why trying this trading style:

  • Leverage – allows you to borrow funds to increase your chances in the market. A leverage ratio may be 1:5, 1:30, etc. That depends on the platform you use. Within a single strategy, leverage allows multiply your initial investments many times. Of course, if your strategy works and your price prediction is correct.
  • Liquidity. Pick the most liquid crypto assets for trading, for example, those with large capitalisations like Bitcoin or Ethereum. The fact is that these coins are always in demand. There will always be those to “bet” on increasing and dropping prices.
  • Risk management. By picking a different leverage ratio, you can control your risk level. For example, 5X or 2X is a minimum leverage ratio suitable for novice futures traders. Leverage allows compensating for the loss.
  • Another reason why crypto futures are worth trying is the opportunity of making money on both dropping and growing markets, using the “short” and “long) crypto futures strategy.

5 Steps to Start Trading Futures

1. Since cryptocurrency futures trading is a truly challenging type of investment, both novice and experienced users face difficulties and challenges in doing it. It takes an enormous amount of time and practice to comprehend how the market moves and analyze all the factors we have mentioned before that affect crypto rates. Gathering all this information and external factors and making a correct prediction from it might be a time-consuming task. Lack of analysis and practice results in traders bottoming out and losing all their capital at once. To be consistent and cautious, it is advisable to follow these steps:

Trading methodology

2. Watching a YouTube video on trading is not enough for success. What really matters is only your own experience – mistakes you make and lessons you take. Your methodology is not repeating someone’s steps but working out your personal features to understand what trading is suitable for you. That involves your lifestyle, purposes and long-term goals, and risk-taking. So you should understand your goal in trading and the timeframes for it, find trading parameters that suit your character, assess how you perform those parameters and how difficult it is for you and correct every parameter if you face difficulties on your way. You should be confident in what you do with every step you take.
Come up with a trading plan.


Like with everything in our life

3. having a plan is already a huge step on the way to your goal. If you have a plan, you know which direction you are moving and know your next step. It helps to be consistent and, thus, calmer and confident. Planning a trading path, you should have an idea of how you will begin futures trading and when you will exit, set up stop-loss tools, and think about other helpful tools. Having a plan will help you lower stress, and when you are calm and take decisions with a cool head, it helps you notice all the nuances you could miss out on if you trade with emotions and rush. Basically, control over emotions is one of the crucial features every crypto futures trader should learn.

Manage risks

4. First and foremost, you need to think and understand what is acceptable for you and what is not. Draw those lines and never cross them, no matter how tempting the opportunity is. Making small portions of profit is a much better strategy, for it is less risky and allows one to consistently and gradually accumulate a much larger amount, compared with highly risky and stressful strategies that can lead to a total crush. Work to have realistic expectations, and do not allow emotions to guide you.


5. As we said at the beginning of this article’s beginning, cryptocurrency futures is not “betting” in a direct sense, but it may look like that for inexperienced traders. Behind the word “betting”, colossal work is done and double-checked. Remember, if you treat trading as gambling, you will lose everything. It is crucial to understand that in crypto trading, you will face numerous psychological traps, and you should be strong to avoid emotional decisions. Put realistic goals, reach every target step by step, use small leverage, take profit in portions that will eventually gather an impressive sum, and never put your last money (or moreover, borrow) for future training; otherwise, you will no longer be able to make decisions with a cool head. Do not rely on luck, but on yourself and your strategy.

Never stop learning

In trading, like in every field of our life, education is at the core. Once you stop learning, you lag behind. The cryptocurrency industry is very young. Every time, something new is added, and new projects emerge. Competition is shaking the market, moving supply and demand. On the one hand, it makes this industry exciting, and on the other hand, it increases risks and keeps investors abreast of the latest updates and news from the industry, for they all may affect the entire market. Education and communication with like-minded people are the way to success no matter what field we take. It will help you to expand your knowledge and experience and come up with new profitable ideas, reach industry insights and plan bigger profits.

Wrapping Up

The main reasons why it is worth trying crypto futures trading are the enormous earning opportunities that this trading tool offers, including multiplying your initial capital, generating high profits from small investments using leverage; hedging risks and control over your capital, and the possibility to making money even when the market is collapsing. The key to success is to have enough knowledge to analyze the market and its further movement, be consistent in every step you make, and make decisions without emotions and pressure. These all come with experience. The market offers many different crypto exchanges that allow for crypto futures trading, but if you are a beginner, you need the one that allows you to practice.

A worthy option here is the WhiteBIT cryptocurrency exchange, which offers demo trading accounts with demo tokens that you may use and try different trading strategies and leverage ratios to see how it works and understand which trading methodology suits you better and which is your cup of tea, and after all, access your willingness to risk.

To keep abreast of the latest crypto news and learn more about crypto trading, welcome to the WhiteBIT blog. Right there, you will find helpful step-by-step instructions on different trading styles.

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