Futures is a contract for the acquisition in the future at a fixed price of some asset. On the crypto market, the objects of such transactions are coins, tokens, NFTs. However, it is important for a trader to understand in more detail what futures are.

First of all, this is an opportunity to profit from speculation in digital assets. And even before the actual acquisition. As with trading in the stock markets, there is still a risk of burnout on contracts with a delayed expiration date on crypto exchanges.

When did futures appear on the crypto market?

The first such transactions were registered in 2017. Postponed contracts are popular because they allow parties to guarantee a predetermined future price for a digital asset.

Futures Characteristics

The most important of them include:

  • type of contract – settlement or delivery;
  • due date – shows the date of receipt of a digital asset or money.

Cryptocurrency exchanges trade delivery and settlement types of futures. The first means the direct execution of the delivery of a digital asset within a specified period at a cost fixed in the contract. As a result, the deal is profitable if you have a forecast with a high degree of probability that predicts the future of cryptocurrencies.

The settlement contract does not give rights to receive the asset, but allows you to calculate the profit or loss on the futures’ closing date. For example, according to the contract on the 10th, the price of the coin should be $100. If the real quote is higher than this rate, the difference in the form of profit will be received by the owner of the futures. Otherwise, if the coin rate falls below $100, the difference in the form of a loss will be paid by the owner of the contract.

What are futures in terms of risks?

In recent years, investors have become more and more interested in futures, as this is one of the risk hedging tools. Thus, the trader protects his capital from unforeseen events in the market (drawdowns, inflation, etc.).

By applying a hedging strategy and concluding contracts with deferred expiration dates, a trader protects his capital from jumps in quotes for a digital asset. For example, an investor has 1000 BTC in his account, and according to the forecast, the quotes of this cryptocurrency are expected to decrease. If the owner does not want to sell the digital asset, then he opens a short position. Then, with the profit from the futures, he compensates for the fall in the BTC rate.

As a result, you can confidently make a profit. To do this, you need to know how to determine the trend with a high degree of probability