Bitcoin futures have been introduced but you need to know how it works and how to trade in them to be able to make the maximum use of them. The Bitcoin futures are traded like any other futures market. It is similar to how you would trade say a gold futures contract or a futures contract of any other commodity. The Bitcoin futures let the customer buy and sell a certain quantity of the cryptocurrency at a fixed time into the future. This offers the traders leverage on their position and lets them increase their exposure to the asset that is underlying, in this case, Bitcoin. The benefit of trading in futures is that it offers leverage but understand that it also increases the scope of loss.
There have been a lot of fluctuations in the price of this cryptocurrency. There is high volatility in the prices and this, in fact, creates plenty of trading opportunities. Many of the exchanges are allowing trading in Bitcoin futures.
To start trading in cryptocurrency futures
To begin trading in Bitcoin futures, you first need to open an account with an exchange. Not all the exchanges will let you trade Bitcoin futures, so make sure that you do your research well. The exchange should also be secure and have adequate protection to prevent any identity theft or any fraud.
How to trade
You will have to input your personal details and the areas where you are interested in investing. You then need to deposit money into the funds and link your account with your bank. Some of the exchanges will let you trade fiat currencies while some using other cryptocurrencies as well.
Futures allow the traders to hedge their positions and help to mitigate the risks. Miners use the Bitcoin futures that depend on the cryptocurrency prices because of that is their income. Some of the exchanges will have a standard Bitcoinfuturescontract size.
Ina futures contract the Bitcoin investor can go with a long or a short on the trade. They can buy or sell the contract as they wish. You need to take a decision whether to go long or short on the Bitcoin futures. If you think that the price will rise above the market price of Bitcoin then goes long. If you think that the price will fall from the current market price then go short on Bitcoin.
A word of caution
Before you start trading in Bitcoin, understand the risks involved. You can then make use of the futures contracts to have better leverage on your trades.