Futures as a financial derivative also enter the cryptocurrency market at any time as the cryptocurrency world develops. It can be used to magnify the principal to grab profits, or as a hedge against risk. MEXC has supported more than 100 futures trading pairs, even first-time or exclusive futures trading pairs, to meet the needs of users. However, for some junior investors, the threshold for futures trading is still relatively high, and it will be difficult to understand the operation of futures. This article will give you an idea of what Futures is.
What is Futures Trading
Futures trading is a contract in which the buyer and seller of a transaction agree to trade an asset at a specified price. Investors can obtain the income of the price increase of crypto-assets through “buy long” futures, or hedge the risk of falling crypto through “sell short” futures, achieve risk avoidance through hedging, or use arbitrage models to stabilize profits.
Futures trading can enlarge the principal through leverage, and the existence of leverage makes the cryptocurrency amplify its returns and risks on the basis of its own higher investment risk. New users need to be cautious after understanding the basic situation of futures trading.
Pros of futures trading
Leverage: A large amount of capital utilization can be achieved by only a small amount of money. With leverage, you can make a profit by amplifying small price movements. At MEXC, users can use up to 125 times leverage.
Liquidity: The crypto futures market is extremely liquid, with trillions of dollars traded daily. Liquid markets are less risky because traders can easily open and close positions with minimal slippage.
Diversified trading strategies: Traders can develop complex trading strategies such as short selling, arbitrage, grid trading, etc., to obtain greater profits.
How to start futures trading
Step 1, open a future account.
Login to your MEXC account, click on [Futures Market] on the top menu bar to go to the futures trading interface,
Please read the risk disclaimer and start your futures trading by agreeing to it.
Step 2, Interface Introduction
Before starting trading, you may adjust the position mode under the [setting] icon on the top right. You may choose a one-way mode or hedge mode.
Then, set the margin mode and leverage multiplier. There are cross mode and isolated mode. Here you can manually adjust leverage, MEXC supports up to 125 times leverage in futures trading. Please manage your risk, the higher the leverage the higher the risk.
There are hundreds of futures trading pairs with hot underlying crypto on MEXC, you may choose your favorable futures on the top left.
USDT-M Futures is USDT-margined Futures that use USDT as collateral, Profit and Loss (P&L) is denominated in USDT. Coin-M Futures is Coin-margined Futures that use the underlying crypto like BTC as collateral, P&L is also denominated in BTC.
If you want to trade USDT-M futures, you may click on [Transfer] and then transfer USDT as collateral from spot account to futures account.
Step 3, Open a position.
Suppose you use 10x leverage with 100 USDT as the margin when the BTC price is 50,000USDT. You may choose to place orders by cont, or just place orders by BTC as the same as spot trading. Enter price 50,000 and 0.02 for the quantity.
After clicking on Buy and order is completed, you will get a long position of 0.02 BTC.
All your positions are listed here, you can check each position info, its estimated liquidation price, and unrealized profit & loss. And you may choose to add on margin to reduce the liquidation risk.
Step 4, close a position.
You may close your position by selecting limit close or market close on the position info section directly.
Or use the place order section, remember to check [reduce only] under one-way mode.
Under hedge mode, simply switch to the [Close] tab.
If BTC price rises to 55,000 USDT, you may quickly sell 0.02 BTC at the market price.
Once the order is completed, there will be 200 USDT left in your futures account and you will earn 100 USDT profit (Funding fee & commission excluded)
How to Demo trading?
You can enter the simulated disk in the navigation bar of the contract page – simulated disk position to experience the transaction in advance.
Closing thoughts
Futures trading is the domain of professional players in traditional finance, while in the cryptocurrency market, the trading of futures is very common. You can grow in futures trading by continuing to read other futures-related articles from the MEXC Learn to get more futures trading knowledge and techniques.
Disclaimer: Trading crypto involves significant risk and can result in the loss of your invested capital. The materials are not related to the provision of advice regarding investment, tax, legal, financial, accounting, consulting, or any other related services and are not recommendations to buy, sell, or hold any asset. MEXC Learn solely provides information, but not financial advice. You should ensure that you fully understand the risk involved before investing.
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