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What is Leverage in Crypto Futures Trading?

Crypto futures is a risky option for trading cryptocurrencies in the context of market speculation. If you have an idea of where the market will continue to move, you can predict the price of the asset over time. How does crypto futures work?

Let’s say you have some BTC coins, and you are confident that the project will gain momentum. In this case, you create a “long” position. This means that, in your opinion, the price of BTC will rise. When you enter a derivative contract, you set the price and the contract’s end date. You then wait for this date, and if your prediction comes true and the price of Bitcoin actually rises, you make a big profit. If, on the other hand, the prediction fails, you bear losses.

Another example is if you believe that an asset’s price is going to go down, you go “short”. A short position is an attempt to profit from a falling market. If your prediction is incorrect and the asset price has risen by the date of the contract’s expiration, you lose money. So in this case, success for you means that the asset price will fall.

Picking the asset for crypto futures trading, pay attention to those with the highest liquidity and low volatility, for example, BTC, ETH, SOL, etc. The more stable coin you pick, the fewer risks of failing in futures trading. All top traded futures assets are available on the WhiteBIT crypto exchange.

Crypto Futures Leverage

Crypto futures involve forecasts of future prices. Many reputable cryptocurrency platforms offer tools for this type of trading and various leverages. Leverage is the number by which your initial investment is multiplied if you get your predictions right; it can be X2, X10, X20, etc. Some facts about leverage:

  1. By choosing the size of your leverage, you can estimate how much you will lose if the market moves in the opposite direction.
  2. The higher the leverage, the more risk you take. Therefore, beginners are advised to reduce leverage.
  3. Leverage is borrowed capital. You can borrow money from the trading platform or users who lend you their assets.

On the WhiteBIT demo account, you can try all leverage sizes and understand how they work. The platform offers leverage up to 20X and has a financing mechanism to lend funds to its clients.

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