How To Start Trading Future
Starting is fairly simple. Whether you’re serious about succeeding in this activity or you just want to explore your options, all you need to do is to find a good futures trading exchange or download a futures trading app like DRAGNFLEX.
CoinFLEX’s trading app is definitely one of the simplest ways you can start trading crypto futures today. It’s user interface is very easy to use even for the less experienced traders and it offers full functionality plus some rock-solid backup.
Besides, their platform is very secure and does an excellent job at protecting your funds by making use of cold storage policies.
Another great news is that you don’t really need to own actual Bitcoins to start trading Bitcoin Future Contracts. In fact, you don’t need to be an expert Bitcoin trader to Trade Futures. You just need to use the app to purchase a contract and when it ends, you’ll see your profits or losses.
However, although great tools like this one are necessary and can give you a clear advantage over other traders, the outcome will greatly depend on your knowledge, ability, amount of contracts and the market itself.
So, before going into details about the app, here are some things that you must understand about futures.
What Is Future Trading?
Futures trading is simpler than what it sounds like. Fairly easy to understand and has also been around for about 310 years.
Reportedly, the first organized exchange to trade futures was the Dojima Rice Exchange in Osaka, Japan. In the western market, the first official commodity trading exchange was established until 1877 (although futures were already being traded before that).
In simple words, they’re a very attractive kind of trading in which the asset traded is not the commodity itself but a contract.
Investopedia defines Futures as “…a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange…”
Not only it serves as a great tool to mitigate and reduce the risks of volatile markets, but it is also an extremely profitable activity. In fact, its liquidity is pretty strong as many millions of contracts are traded every single day.
How Does Future Trading Work?
Futures work in a very simple way. Two parties enter a contract in which they agree upon a date and a price to complete the transaction of the commodities. Although not completely risk-free, the fact that the transaction price is already set, allows you to plan better and have control over the outcome.
Let’s say, for example, that Bitcoin is currently trading at $10,000.
When you enter a futures contract as a buyer, and the other party as a seller, you both agree that 6 months from today the transaction will be performed at $12,000 per Bitcoin.
After those 6 months, it doesn’t matter how much the Bitcoin’s market price changed, the price you will pay for that bitcoin will be $12,000. If the price skyrocketed to $20,000, it means that you’re spending $8,000 less than the market price (in other words, good profit). If, on the other hand, the price stays at $10,000 then you’ll be paying $2,000 more than its current value. In that case the seller would be perceiving the earnings.
Due to its nature, a futures contract makes for a less volatile asset.
It serves both as a way of hedging other investments and a way to reduce the risks associated with volatile markets. It is for this reason that Futures are so attractive for Bitcoin Traders. The potential for profit is undeniable and the risks can be easily managed.
Now that the basic concepts have been explained we can move to the important part.
To Start Today
Understanding the way this type of trading works is a great first step. Logically, downloading the app and getting used to it would be a great second step, and it doesn’t require much time or effort to start with.