What Does Crypto Futures Trading Mean And Is It Legal?

Cryptocurrency trading has become a very popular way to make money. Amidst the high volatility of digital assets, traders generate income even when the whole market moves down. In this article, we will talk about the way to earn when the prices go down.

What Is Crypto Futures Trading And How Does It Work?

Spot trading is usually successful in the upward market, which is also called the “bull trend”. Of course, using different complex trading strategies, experienced traders can make money even on a downward trend (”bear market”). One of them is futures trading.

So, crypto futures is the type of trading where parties make forecasts on the future price of assets. They conclude a derivative contract and carry out buying and selling transactions when the contract expires. 

Usually, crypto futures work with cryptocurrencies that have high liquidity, for example, Bitcoin. Despite the market movements and price fluctuations, this asset is always in demand.

So, for example, if you think that the price will grow, you open a “long” position in the futures contract, where you fix the price you think the asset will have at some exact point in time in the future. When the contract expires, you check the current rate of the asset. If your forecast was right, you receive a profit. The same with the “short” position. Suppose, you think the assets rate will drop in the future. So you open the “short” position and when the expiration period passes, you receive a profit if the rate really dropped. That is futures trading in simple terms.

Here are the platforms allowing futures trading:

• Binance Futures
• WhiteBIT
• ByBIT

The WhiteBIT exchange allows the futures with no expiration periods. It is possible due to the platform’s funding. The assets rate in this case keeps around the spot market price.

It is quite legal to trade futures on the WhiteBIT exchange, for it operates officially and complies with all the rules of AML and KYC standards. You can also practice futures trading using a demo account on the WhiteBIT platform.