Trading Basics
Trading Bitcoin Futures Contracts on Bitget
Beginner
2023-10-20 | 5m
Bitcoin futures contract is a derivative product similar to traditional futures contracts. It is an agreement between two parties to buy or sell a specific amount of
Bitcoin at a specific time in the future.
Each future transaction will include both long (agree to purchase) and short position (agree to sell). If the m arked price on the contract is above the entry price at the expiration date, the buyer will profit and the short position will suffer loss, and vice versa. Your profit or loss is calculated as: (Mark Price - Entry Price) x Amount x Leverage Ratio. You earn or lose money proportional to your leverage ratio and the difference between your entry price and the underlying's mark price.
What can you do with Bitcoin futures?
Speculation
Some investors may use Bitcoin futures contracts primarily for speculative purposes. With a high leverage ratio, you may 10X or even 100X your asset within minutes, as long as you're betting in the right direction and close your positions at the best time possible.
Reduce risk from volatility
However, the main purpose of the Bitcoin Futures Contract is to manage the risk. Both buyers and sellers can purchase a certain amount of Bitcoins by locking them up at a fixed price in the future. It aims to reduce the risk of volatility of the price of Bitcoins. This process is called "hedging".
To reduce hedge your risks, both buyer and seller always purchase at a fixed transaction price and quantity through setting up futures contracts. Sellers need steady earnings to cover costs. Buyers must purchase at a steady price and quantity to fulfill the needs.
Similar to the seller in the commodity market, the Bitcoin miners may take a short position in order to secure the value of the Bitcoin they mined. They have to cover the mining cost spent on electricity and hardware.
Diversification
Investors can diversify their portfolios with futures positions. You may create a well-balanced portfolio of different coins and products and stand to benefit whenever there's a change in any asset's price.
How to trade Bitcoin futures on Bitget
If you want to start trading Bitcoin futures on Bitget, you just need to set up an account and get yourself some funds. Here’s the step-by-step guide to start trading Bitcoin futures contracts:
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Create an account on Bitget and complete the identity verification. If you already have an account and complete the identity verification, you can deposit funds into your future account.
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Purchase some BTC, Tether (USDT), or other supported cryptocurrencies for futures trading. The easiest way to do this is to purchase them with your debit or credit card.
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Navigate to the Bitcoin futures overview and select the type of contract you want to purchase. Select any of the futures products under "Trade" -> "Futures" in the upper navigation bar.
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Before opening a position, if there are no assets in your Futures account, you can click on the "Transfer" function to transfer crypto from other accounts to Futures account. There is no fee for internal transfers.
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After selecting the trading pair, margin mode, order type, and leverage, enter the price and quantity, and select the direction to place an order.
For more detailed instructions, refer to our complete guides on trading futures:
Register now and start your futures trading journey today at Bitget!
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