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Final Verdict

If you’re looking to get started with cryptocurrency trading or investing, choosing the best exchange for your specific needs is essential. Whether you want a large number of digital assets to trade, the lowest possible fees, or the most beginner-friendly user experience, there is a good option for you. 

Our best overall choice, Coinbase, could be the right exchange for you if you’re seeking a user-friendly platform that supports a large number of cryptocurrencies. And if low fees are important to you, Kraken Pro may be a good choice. Consider your goals and priorities, and choose the exchange that best fits your needs.

Compare the Best Cryptocurrency Exchanges

Guide for Choosing the Best Crypto Exchanges

Are Crypto Exchanges Worth It?

If you are looking to purchase cryptocurrencies, signing up for a crypto exchange can be your best option to get started. 

While buying a few hundred dollars worth of Bitcoin from a local Bitcoin ATM may be convenient, it makes more sense to use an exchange if you are looking to invest a larger amount or you’re interested in buying a range of cryptocurrencies.

Crypto exchanges are the safest and most legal way to obtain cryptocurrency. But that’s not the only reason using an exchange is most suitable. Here are some of the reasons crypto exchanges are worth it. 

• Crypto exchanges let users buy and sell cryptocurrencies online or using a mobile app, making it easy to access the crypto markets from anywhere. 
• Most cryptocurrency exchanges offer a range of digital currencies and tokens, providing numerous options for investors that want to build a diversified portfolio of digital assets. 
• Leading crypto exchanges typically hold user funds in cold storage to ensure the safety of assets. 
• Global crypto exchanges usually comply with Know Your Customer and Anti-Money Laundering (KYC/AML) rules as well as financial regulations. Therefore, users can be assured they’re not dealing with a fraudulent company or malicious market participants. 

Comparing Crypto Exchange Platforms

When choosing a crypto exchange that meets your needs, there are several factors to consider. The most important things to look at are:

• Supported assets: If you are looking to buy cryptocurrencies other than Bitcoin, look at the list of supported assets before deciding on an exchange. Some only support a few cryptocurrencies, while others allow you to trade hundreds. 
• Payment methods: Crypto exchanges typically offer a handful of ways to fund your account or purchase cryptocurrencies directly. While most exchanges support wire transfers, some platforms also allow you to buy crypto using credit cards, debit cards, and other digital payment methods. 
• Fees: High fees can eat into your investment returns, which is why it is important to research crypto exchange fees before you open an account. Crypto exchanges typically charge trading fees and withdrawal fees, but other fees can also pop up. 
• Security: Unfortunately, crypto exchanges are a prime target for hackers looking to get their hands on cryptocurrency. Security breaches and cyber theft are common in the crypto exchange landscape, which is why it is essential to choose an exchange with strong security measures in place.
• Customer service: If you are new to cryptocurrency or investing, you may have questions or need help getting started. In that case, choosing an exchange with excellent customer support is probably the right move. 
• Reputation: Before you sign up for an account on a crypto exchange, it’s a good idea to research that exchange’s reputation first. Read customer reviews, look into the exchange’s history, and look for any recent news stories that might provide some valuable insight 

Signing Up for a Cryptocurrency Exchange Account

Opening an account on a cryptocurrency exchange works in a similar way to signing up for an online brokerage account. 

To start, you typically need to provide an email address and a password to initiate account creation. Next, you will receive an email asking you to confirm that you are the owner of the email address you provided. 

Once you confirm your email address, you will usually be asked to complete an identity verification process. This generally involves providing personal information, proof of address, and uploading a copy of a government-issued photo ID. Most crypto exchanges ask for your full name, home address, and mobile number, as well as a utility bill or bank statement as proof of address and a digital copy of your passport or driver’s license. 

Some exchanges may also require an extra step to prove that the ID you are uploading is actually yours. Generally, this involves taking a photo of yourself holding your ID with a webcam or phone and submitting the photo to the exchange. 

User verification can take from a few minutes up to several days, depending on the exchange and the level of verification required. Exchanges often offer tiered verification levels, with lower tiers requiring less information. Lower verification tiers, however, usually come with lower deposit and withdrawal limits. 

After completing the verification process, you can fund your trading account using the available funding options and start to buy and sell cryptocurrencies. 

How We Chose the Best Crypto Exchanges

Our team reviewed 28 cryptocurrency exchanges and collected over data points using publicly available information before selecting our top choices. We weighted more than 20 criteria and gave a higher weight to those with a more significant impact on potential customers. 

The top picks were selected based on factors like trading fees (weighted 20%), withdrawal fees (15%), and if an exchange offers cold storage of crypto assets (weighted 10%). 

We also took into account platform availability, the number of cryptocurrencies available, and customer support options. For further information about our selection criteria and process, our complete methodology is available.

Best for Beginners

Platform rewards users for consuming educational material

Commission-free and social platform to discuss strategy with other investors

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#1 on the Cybersecurity Ranking and CERtification Platform

Automatically invest on a scheduled basis with dollar-cost averaging

Uses elevated account limits to verify a buyer's integrity, but not their identity

+

25+

6

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60+

No set list

% - % / % - %

$0 commission fees (% markup fees still apply)

No commission fees (spread fees still apply)

% - %% - /%

% - %/% - %

BTC or BSQ / BTC or BSQ

$2

$0

$0

$1

$10

BTC

Yes

Yes

Yes

Yes

Yes

No

What Are Bitcoin Futures?

Bitcoin futures enable investors to gain exposure to Bitcoin (BTCUSD) without having to hold the underlying cryptocurrency. They are similar to a futures contract for a commodity or stock index in that they allow investors to speculate on the cryptocurrency’s future price. The Chicago Mercantile Exchange (CME) offers monthly contracts for cash settlement. This means that an investor takes cash instead of physical delivery of bitcoin upon settlement of the contract.

The Cboe Options Exchange offered the first bitcoin futures contract on Dec. 10, But it discontinued offering new contracts in March The CME opened its bitcoin futures platform on Dec. 18, In addition to standard bitcoin contracts, the exchange offers Micro Bitcoin futures, which are 1/10th the size of a standard bitcoin, and options on bitcoin futures. Other venues, like Bakkt and Intercontinental Exchange, offer daily and monthly bitcoin futures contracts for physical delivery.

Understanding Bitcoin Futures Investing

Bitcoin futures serve many purposes, each one unique, for different actors in the Bitcoin ecosystem. For Bitcoin miners, futures are a means to lock in prices that ensure a return on their mining investments, regardless of the crypto’s future price trajectory. Investors use bitcoin futures to hedge against their positions in the spot market. For example, if an investor bets on a price increase for bitcoin in the spot market, then they might short its futures as a hedge. Thus, they stand to make money even if the bitcoin price moves in a direction opposite to the one specified in their bet. Speculators and traders, who frequently move in and out of futures trades, might use bitcoin futures for short- and long-term profits.

There are several benefits to trading bitcoin futures instead of the underlying cryptocurrency. First, bitcoin futures contracts are traded on an exchange regulated by the Commodity Futures Trading Commission (CFTC), which might give large institutional investors some measure of confidence to participate. For most of its short existence, the cryptocurrency has traded outside the bounds of regulation, making it a risky asset for institutional money.

Second, because the futures are cash-settled, a Bitcoin wallet is not required. No physical exchange of bitcoin takes place in the transaction. Thus, a bitcoin futures trade eliminates the risk of holding a volatile asset class with steep price changes. Also, holding bitcoin in custody can be an expensive affair and add to the overall costs. Finally, futures contracts have position limits and price limits that enable investors to curtail their risk exposure to a given asset class.

Note that as of October , investors can gain exposure to bitcoin without buying or selling futures themselves. The ProShares’ Bitcoin Strategy Fund (BITO) tracks CME bitcoin futures. The exchange-traded fund (ETF) started trading on Oct. 19, , as the first bitcoin ETF.

Where Can You Trade Bitcoin Futures?

Growth of the bitcoin futures market has paralleled that of the cryptocurrency’s spot market. Cryptocurrency exchanges were the first venues to offer bitcoin futures trading capability. But the absence of regulation for cryptocurrencies made them risky venues for serious traders.

The launch of bitcoin futures trading at CME and Cboe changed the status quo. While Cboe has discontinued bitcoin futures trading at its venue, CME has doubled down on cryptocurrencies and introduced other derivative products related to it. For example, the Micro Bitcoin futures is 1/10th the size of a standard bitcoin futures contract at CME.

Bakkt, which is backed by NYSE owner Intercontinental Exchange, was launched in and advertises itself as an end-to-end solution to promote regulated price discovery and market liquidity. It also offers trading in physically-settled bitcoin futures and options. ErisX is a Chicago-based trading firm that offers cash-settled bounded bitcoin futures trading capability that limits exposure to the cryptocurrency by setting upper and lower bounds.

Exchanges like Seychelles-based OKEx and Malta-based Binance are some of the biggest venues for trading in bitcoin futures. The latter exchange, in fact, is ranked first based on the numbers for open interest contracts on its platform. However, it is not regulated by U.S. authorities.

How Does Bitcoin Futures Trading Work?

The rules and setup for bitcoin futures is the same as that for regular futures trading. First, you need to set up an account with the brokerage or exchange to begin trading. Once your account is approved, you can begin trading.

Futures trading makes heavy use of leverage to execute trades. In the unregulated Wild West of cryptocurrencies, the leverage amount can vary wildly between exchanges. For example, Binance offered leverage of up to times the trading amount to traders in It reduced the leverage amount to 20 times in July

The main considerations for bitcoin futures accounts are margin requirements and contract details. Margins are the minimum collateral you must have in your account to execute trades. The higher the amount of the trade, the greater the margin amount required by the broker or exchange to execute the trade.

A point to note here is that exchanges and brokerages can have different margin requirements. For example, CME has a base margin requirement, and brokerages like TD Ameritrade that offer CME bitcoin futures trading as part of their product suite can set margin rates on top of the base rate set by CME.

Because Bitcoin is a risky and volatile asset, regulated exchanges generally require higher margin amounts compared to other assets. Some cryptocurrency exchanges, like Binance, allow the use of cryptocurrencies as margin. For example, you can use stablecoins, like Tether or bitcoin, as margin for your trades at Binance.

Reading Contract Details for Bitcoin Futures

Below are the contract details for bitcoin futures offered by CME:

• Contract unit: 5 bitcoin, as defined by the CME CF Bitcoin Reference Rate
• Price quotation: USD
• Trading hours: Sunday–Friday, 6 p.m.–5 p.m.
• Product code: BTC
• Margin requirements: 50% cash of the contract amount
• Listed contracts: Contracts listed for six consecutive months and two additional Decembers
• Settlement method: Financially settled

Consider the following example for a CME Group bitcoin futures contract. Suppose an investor purchases two bitcoin futures contracts totaling 10 bitcoin. The price of a single bitcoin, when the futures contract was purchased, is $5, each, meaning the total price for both futures contracts is $50, The margin requirements for bitcoin futures trading at CME is 50%, meaning that the investor has to deposit $25, as margin. They can finance the rest of the contract purchase by using leverage.

The contract’s value varies based on the price of the underlying asset (i.e., bitcoin). The Bitcoin Reference Rate is used by CME to determine the price of bitcoin. It is the volume-weighted average price for bitcoin sourced from multiple exchanges and is calculated daily between 3 p.m. and 4 p.m. London time.

Depending on bitcoin’s price fluctuations, the investor can either hold onto the futures contracts or sell them to another party. At the end of their contracts’ duration, the investor has the option to either roll them over to new ones or let them expire and collect the cash settlement due. Some contracts, like the ones at Bakkt and ErisX, are physically settled. This means the investor will get final delivery of the commodity—in this case, bitcoin—upon expiration.

In , CME introduced Micro Bitcoin futures (MBT) trading. The size of an MBT contract is 1/10th of one bitcoin or 1/50th of the larger BTC futures contract. Thus, if the Bitcoin Reference Rate is set at $20,, then the notional value of one Bitcoin Reference Rate is $ More than 3, accounts traded in Micro Bitcoin futures after it was first launched.

Special Considerations for Trading Bitcoin Futures

While it has increased in volume, bitcoin futures trading is still nascent in terms of market dynamics and constituents. Therefore, it is unlike other futures trading for other asset types. Here are some special considerations that you should note while trading bitcoin futures.

• Bitcoin futures trading resembles spot markets for the cryptocurrency in that it lacks the deep pool of liquidity or sufficient number of actors in its ecosystem that are present for other commodities. Therefore, trading volumes can be low and price fluctuations can be high, especially during volatile stretches of the cryptocurrency’s price. Futures trading for other commodities can provide indicators or predict spot market prices in advance. Bitcoin futures, however, either follow spot market prices or trade at a significant premium or discount.
• The regulatory landscape for bitcoin futures trading is still unclear. As mentioned above, there are very few exchanges that offer regulated futures trading. Bitcoin futures trading offered at exchanges located outside the United States do not come under the purview of agencies situated in the country. Such situations have the potential for profits through regulatory arbitrages, but they can also result in exponential risk.
• The price for bitcoin futures is dependent on the price of a volatile underlying asset. While there is a theoretical formula to calculate the price of bitcoin futures, several other factors come into play in a real-world scenario. Investor perception of an asset’s volatility is one. Big news events are another. With its massive price swings and bubbles, Bitcoin already has a reputation among investors for price volatility. And there is no dearth of commentary about a cryptocurrency that was originally designed to become a medium for daily transactions but has, so far, failed to fulfill that promise. All of this means that bitcoin futures are not an effective hedge against their underlying asset’s volatility.

Why should I trade Crypto futures?

One common reason is to hedge price risk. Crypto Futures allows investors to mitigate the risk of a falling price by taking a short futures position. If the price of Bitcoin falls while the investor has taken a short position on Bitcoin Futures, it will mitigate the loss of their investment by providing some additional revenue/profit.

The other common reason is to speculate on price direction. Crypto leverage trading enables the opportunity for traders to truly speculate on the asset, even with up to x leverage if they are extremely confident.

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The growth of futures and options in Crypto

Interest in Bitcoin Futures trading across major exchanges like the Chicago Mercantile Exchange (CME), Bakkt and other platforms like Deribit and Bybit has been hitting all-time highs as institutional investors rush to gain exposure to Bitcoin. In terms of size, open interest for CME Bitcoin futures hit a new all-time high on 5 May of just under $ million.

It comes as no surprise that prominent American hedge funds are becoming increasingly interested in Bitcoin Futures given the growth of the asset in the past few years. This is perpetuated even further due to the macroeconomic backdrop in which Federal Banks are printing record stimulus in a futile attempt to stimulate the economy.
‍
Most notably, Paul Tudor Jones II of the Tudor Investment Corp has recently come out and stated that he is “interested in Bitcoin as an emerging macro hedge against money printing and geopolitical uncertainties”. Mr Jones later told CNBC in the same interview that he has 2% of his assets in Bitcoin tied to Bitcoin Futures contracts on the CME.

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Crypto leverage trading fees

Here are some of the common fees and costs associated with trading cryptocurrency futures contracts with leverage.

1. Trading Fees: Much like spot trading, Bitcoin Futures contracts will typically charge a commission for
   a buy or sell.
2. Extension Fees: Fees can apply if you extend a Bitcoin Futures contract beyond its close date.
3. Leverage Fees:When you are margin trading Bitcoin, you are borrowing money to use leverage on your trades. There is generally an interest payment attached to borrowing that money.
4. Overnight Fees: Fees can apply for certain Bitcoin Futures contracts when you keep
   a contract open through a certain time period.

Compared to spot trading, cryptocurrency futures trading is very demanding in nature. It requires the right skill and platform to succeed in the market.

The interesting part is that the trades are made on borrowed funds (leverage), making it riskier but rewarding. In case of loss, you’ve to pay the amount back to the exchange with interest. 

In cryptocurrency futures trading, timing, skills, and exchange platforms are crucial to profit from the market; else it will break your back. 

Therefore, you need to select the exchange that offers advanced trading tools, best-in-class liquidity, a clean interface, and execute orders quickly. 

Best Crypto Futures Trading Platforms

(Editor's Choice For )	- Upto x Leverage  - No-KYC Exchange - Store funds in cold wallet	Get Upto $ Joining Bonus
	- Upto 20x Leverage - Deposit in: Bitcoin and altcoins - Store funds in cold wallet	Get 5%&#; on Trading Fees
	- Upto x Leverage  - Can also trade with Forex, Commodities, Indices - No-KYC Exchange	Get +35%&#; on Your First Deposit

#1. Bybit (Best Crypto Exchange For Futures Trading)

Bybit is a Singapore-based global crypto futures exchange launched in March and is credited for increasing retail participation in the futures market.

It is one of the fastest-growing crypto derivatives exchanges in the market and is trusted by over million users. And is constantly ranked within the top 5 crypto futures exchanges by trading volume. 

The exchange offers to trade three different futures markets- Inverse Perpetual Futures (BTCUSD, ETHUSD, XRPUSD, EOSUSD), Linear Perpetual Contracts  (BTCUSDT, ETHUSDT, BCHLINK, LINKUSDT, LTCUSDT, XTZUSDT, ADAUSDT, DOTUSDT, UNIUSDT), and Inverse Futures Contract (BTCUSD quarterly).

Bybit offers maximum leverage of up to X on BTCUSD and BTCUSDT contracts and up to 50X on the rest of the futures contracts. 

ByBit features a powerful and smart trading system suitable for high-frequency trading in the futures market. The transaction costs on the platform are minimal and competitive. It offers a maker rebate of % and charges a taker fee of %. 

Try ByBit Now

#2. FTX

FTX is a leading and popular cryptocurrency futures platform in the market and offers a wide range of futures trading options. 

Launched in November , FTX is incubated by Alameda Research (a top global liquidity provider) and is backed by industry bigwigs like Binance, Bitfinex, Circle, FGB Capital, etc.

The exchange offers to trade in perpetual and quarterly futures, leverage tokens, BTC option, FTX’s proprietary MOVE contracts with a maximum leverage of up to X. 

Other platform features include all futures contracts are settled in USD, flexible collateral (can take a position in BTC-perp by providing ETH as collateral), cross-margin, subaccounts, and a robust risk management framework. 

FTX trading fees on the platform are based on the last day trading volume and are divided into six-level. Under the first level, with a trading volume of less than $2,,, the maker fee is %, and the taker fee is %. FTT token holders are offered a discount on trading fees of up to 60% based on the quantum of holding. 

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#3. PrimeXBT

PrimeXBT is an award-winning bitcoin futures trading platform used worldwide and is well-renowned for its platform technology and trading infrastructure. 

Based in Seychelles, PrimeXBT is a multi-asset exchange established in and offers cryptocurrency margin trading in five different cryptos, BTC, ETH, LTC, XRP, and EOS, and offers maximum leverage upto X. The minimum order size on the platform is BTC. 

The exchange is integrated with 12+ liquidity providers that offer high market liquidity and has an order execution speed of less than ms. You can also take advantage of the PrimeXBT Covesting platform, which allows you to copy the trading strategies of successful traders and succeed in trading bitcoin futures.

The exchange has a flat fee structure and charges a commission of % on all types of trades. The daily funding rate on the platform differs with the change in market conditions.

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#4. Phemex

Phemex is a Singapore-based spot and bitcoin futures exchange with a simple and easy UI suitable for beginner traders and professional traders. 

The Phemex exchange was started by eight former Morgan Stanley executives and was launched in November The exchange has attracted over a million traders in a short span and gets an average daily trading volume of more than $ billion. 

Phemex offers leveraged trading in 15 different cryptocurrencies with a maximum leverage of up to X on BTC perp and up to 20X on the rest of the futures.

It is a high-performance trading platform that can process K transactions per second, with an order response time of less than 1 millisecond. Other advanced functionalities include FIX API for institutional traders and Sub-accounts for quantitative traders.

Regarding trading fees, the taker fee is % and offers a maker rebate of %.

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#5. Binance

Binance is the leading crypto spot exchange and is a preferred exchange for traders to buy bitcoin and other cryptocurrencies. It has set a benchmark in the market regarding product offering, trading volume, and leverage. 

Binance got into the futures market in early , and in a short span, it has become the top platform to trade in crypto derivatives and has deep liquidity. The gross daily trading volumes on the exchange are over $60 billion.

The Binance futures account has become the preferred choice for professional traders and institutional investors. It offers to trade in USDT-margined perpetual and quarterly futures, COIN-M (token margined with or without expiry futures contract), BTC options, and leveraged tokens. You can trade futures with a maximum leverage of up to X. 

Other exchange features include an industry-leading matching engine that can manage , TPS with a minimum latency of 5ms, deep liquidity with minimum slippage, a trading platform compatible with multiple devices, a secure asset fund, etc. 

It has the lowest fees structure among the top bitcoin exchanges and is divided into levels, starting from % as maker fee and % as taker fee.  

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#6. Kraken (Best Crypto Futures Exchange USA)

Kraken is a very old cryptocurrency exchange platform known for its amazing customer services and fast bank withdrawals. 

It is a US-based exchange set up in and launched its spot exchange services in The futures segment offers perpetual futures trading in XBTUSD, ETHUSD, LTCUSD, BCHUSD, and XRPUSD with a maximum leverage of up to 50X. 

With a decade of experience in the cryptosphere, Kraken has vastly improved the customer offering based on customer suggestions and evolving market requirements. The platform interface is customizable, has added tooltips and a simplified order form. It also facilitates discreet trading through its dark pool feature. 

It has a tiered transaction fee structure, with maker fees starting from % and taker fees from %. 

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#7. Deribit (Best Bitcoin Futures Exchange)

Deribit is one of the leading institutional-grade derivatives trading platforms that started its operation in and is based in the Netherlands. 

The exchange offers to trade in traditional futures, perpetual futures, and options of both Bitcoin and Ethereum. It offers maximum leverage of X on bitcoin futures contracts, 50X on Ethereum contracts, and 10X on options. The minimum contract size on the platform is $ 

Deribit API integrated with third-party trading bot software like HAASONLINE, FMZ Quant, and Actant. The platform features dark and light mode and supports multiple order types like Limit, Market, Stop-limit, and Stop-market. 

The exchange is known for low fees among other exchanges. It offers a maker rebate of % on BTC weekly futures and charges a taker fee of %. For BTC/ETH perpetual, the maker fee is NIL, and the taker fee is %. And, for BTC/ETH options, both maker and taker fee is %. 

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#8. BitMEX

BitMEX is a Hong Kong-based bitcoin futures exchange that started its operation in and offers to trade in perpetual swaps, traditional futures contracts, and Quanto futures.

The first crypto exchange in the market to offer futures trading in Bitcoin with leverage as high as X. The exchange platform is more suitable for experienced and professional traders, and the average daily trade volume ranges between $ billion.

The exchange&#;s trading engine is written in kdb+, a database, and toolset used by major banks in the high-frequency trading application, and is known for its speed and reliability.

BitMEX has a good selection of crypto futures contracts and fiat pairs that can be traded and has a low fees structure. It offers a maker rebate of % to market makers and charges a take fee of % on all trades.

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#9. Stormgain

Stormgain is a UK-based global crypto exchange established in and has a user-base of more than , customers.

You can buy bitcoin, trade cryptocurrencies, and bitcoin futures contracts with a maximum leverage of up to X, the highest among all other platforms. It also offers free crypto trading signals on the Stormgain mobile app, recommendations given by in-house technical experts having a forecast accuracy of 70%.

Stormgain doesn&#;t charge any transaction fees. Instead, it takes a profit share of 10% on profitable trades. The minimum contract value on the platform is 10 USDT and allows users to access an advanced charting system for technical analysis to identify trends and increase profitability.

You can add or deposit fiat currencies through Simplex or using credit/debit cards.

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# BaseFEX

BaseFEX is a Seychelles-based crypto derivatives exchange established in Oct and is backed by some of the leading crypto VC firms, including ZhenFund, InBlockchain. The exchange offers to trade Bitcoin,  Bitcoin Cash, ETH, XRP,  LTC, and BNB futures with X perpetual swaps.

The exchange is known for its highest safety standard and has been A+ by Mozilla&#;s Observatory Test. It stores % of the user funds in a multisig cold wallet system. And, the system servers and API are designed to handle millions of trades per second, thus resulting in no system overload.

It&#;s a % no-KYC exchange, and the trading fee structure on the platform is divided into seven levels. The maker fee ranges from %, and the taker fee ranges from %.

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# Margex

Margex is a Seychelles-based futures trading platform founded in and is a privacy-oriented bitcoin futures platform.

The exchange offers to trade in six different crypto pairs- BTCUSD, ETHUSD, LTCUSD, XRPUSD, EOSUSD, and YFIUSD and offers maximum leverage of up to X and minimum leverage of 5X.

Margex platform works by combining liquidity of 12+ bitcoin exchanges in one place that helps it to offer deep market liquidity and reduce order slippage. 

The exchange has given a special focus to enable secure trading on the platform. It uses a bank-grade multi-layer security standard, two-factor authentication to secure login, and MP Shield System for price manipulation protection.

Regarding fees, the maker fee on the platform is %, and the taker fee is %.

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What is Crypto Futures Contracts Trading? 

Unlike crypto spot trading, where you buy and sell digital assets such as Bitcoin and Ethereum for immediate delivery to have direct ownership, on the other hand, in crypto futures trading allows you to gain exposure to crypto assets without having to hold the underlying digital asset.

It is a contract with an agreement to buy or sell the specific cryptocurrency at a future date on an agreed price. The contract tracks the underlying index or asset and its price changes as per the change in the digital asset price. 

Therefore, if a market participant thinks that at the time of expiration of the contract, the price of assets will rise, then he/she will initiate a long position and vice versa. At the expiry, the parties settle the contract, and it closes. 

What makes bitcoin futures trading attractive is due to involvement of leverage. Using leverage allows you to significantly enhance the exposure and increase the profit percentage without putting funds upfront. 

Let’s understand it with an example of bitcoin futures trading:

Suppose BTC is trading at around $30, level, and you expect the price to increase in the short term. Therefore, based on the analysis, you initiate a long position and buy 10 BTC futures contracts valued at $ each. 

And, every increase of $1, in BTC will result in the value of the bitcoin futures contracts increasing by 10%.

At the settlement of the contract, the price of Bitcoin reached $35,, and the value of each futures contract increased to $, a total profit of $3, on an investment of $5, 

If you’ve used the leverage of 50X for a total BTC futures contract, your profit would’ve been $30, on a trading capital of $5, 

Therefore, trading crypto futures help you to amplify your profits by multiple times with the same trading capital compared to trading on the spot market. 

For institutional investors, crypto futures help hedge their position in the spot market and minimize the risk of losses. For example, if an investor has huge Bitcoin exposure, he will take a short position in the bitcoin futures to limit his downside risks. 

How to Trade Bitcoin Futures? 

Trading in crypto futures is very different from trading in the spot market. You need to have a trading plan, risk management strategy, and understanding of the functioning of the derivatives market.

In crypto futures, there is no involvement of the crypto assets as all contracts are cash-settled. Therefore, you aren&#;t required to have the cryptocurrencies in the exchange wallet when trading in their futures. You need to have enough balance in your exchange account to initiate a position and cover the initial and maintenance margin. 

Maintenance margin is the minimum amount of funds you need to keep in the account to cover your losses.

Now, let’s have a look, how to trade bitcoin futures. 

• Step 1: Learn how to trade in bitcoin futures contracts

There are several types of futures products you can trade in the crypto market, like perpetual futures (without expiry), traditional futures (with expiry), inverse perpetual contracts, etc.

You need to understand the products in detail and find out the most suitable one for yourself.

Also, you need to know the factors that affect the price movement of crypto futures, like- how closely the futures price tracks the underlying asset, initial margin requirement, liquidity of the specific contract, and how traders and market makers are positioned in the market. 

• Step 2: Building a trading strategy

For trading in bitcoin futures, you need to have a sound trading strategy based on your trading goals, risk profile, and market understanding. 

It includes finding out technical indicators that generate credible trade signals, order types for executing trades, ways to monitor the market movement, and acceptable levels of risks for each trade. 

Also, money management and position sizing are important elements in crypto futures trading. 

If you’re facing difficulty building a trading strategy, you can use the copy trading feature offered by all the top crypto derivatives exchanges, which allows you to copy the trading strategies of successful traders. 

• Step 3: Open an account with a bitcoin futures exchange

In bitcoin futures trading, good cryptocurrency exchanges play a significant role in long-term success. Select the exchange based on your trading goals, liquidity in the platform, strong platform infrastructure, and system security. 

• Step 4: Test your trading plan.

Using the demo account feature offered by almost all trading platforms, test your trading plan to check how it functions in the real market environment.

Trading in a demo account is the best way to fine-tune your trading strategy without committing any funds and also helps you to get familiarized with the trading platform. 

It saves you from initial anxiety about how your trading plan will perform in the live market.

Once you are confident enough about your trading plan and have gained enough confidence to place trades in the live market, buy bitcoin to fund your account and start trading. 

However, you should remember that trading in a demo account and live exchange account is completely different as your stakes are involved now, affecting trading behavior and performance. 

What Happens When Futures Contracts Expire?

All crypto futures are cash-settled on the date of expiry, which means no transfer of cryptocurrencies is involved in the process of settlement of contracts.

For perpetual contracts, which do not have any expiry date, are executed on the will of the buyer or seller of the futures contract. 

Tips to Get Started in Crypto Futures Contracts Trading

Being a highly volatile asset class, bitcoin futures trading comes with inherent risk, and there is a high possibility of losses if the market turns volatile or if you have misinterpreted the market. 

The following are some tips for successful bitcoin futures trading:

#1. Establish a trading plan: Plan each trade carefully, including your entry point and profit objective. You should also have an exit plan in place if trades go wrong. If your profit objective is met, exit the trade soon.

The objective is to stick to the trading plan and not let emotions drive your trading decision. 

#2. Start small and use leverage carefully: Do not go big on your first few trades; pace carefully. If you’re new to crypto futures trading, start trading with just 5 to 10 futures contracts and learn how the market functions. Never use leverage during the first few trades. 

Develop a trading methodology and only if you are consistent and the trading strategy is working as per expectation, increase the position size or use leverage. Don’t risk more than you can afford to lose. 

#3. Do not trade too many markets: Experienced traders do not trade too many markets and keep fine-tuning their strategies of a few markets. 

Always trade the market that you understand and are comfortable with.

#4. Be patient: Markets are unpredictable and can sometimes drive you crazy with their price movement. Do your research and monitor the market to identify trade signals between such moves and execute your trading plan accordingly. 

Don’t get perplexed by extreme short-term volatility, and always keep a long-term perspective of your trading goals.

Conclusion on derivatives exchanges 

Selecting the best futures exchange is not an easy task. The Bitcoin exchanges discussed above are some of the best in the industry and make up a major portion of the market. 

You should select based on your requirements and platform preference. Choosing an exchange should not be based on higher leverage or trading fees, but it should be based on liquidity, platform interface, and speed. 

And, before signing up, use the demo version of the futures trading platform to assess its suitability.

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Sudhir Khatwani

Hey there! I am Sudhir Khatwani, an IT bank professional turned into a cryptocurrency and blockchain proponent from Pune, India. Cryptocurrencies and blockchain will change human life in inconceivable ways and I am here to empower people to understand this new ecosystem so that they can use it for their benefit. You will find me reading about cryptonomics and eating if I am not doing anything else.

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Crypto Derivatives Exchange

A derivatives exchange is an organized marketplace for transferring financial risk from one party to another. Derivatives exchanges allow buyers and sellers to trade standardized contracts called futures, forwards, options, and swaps. A futures contract is a traditional form of speculation and hedging, which allows two parties to exchange the difference in price between a fixed monetary value (the future price) of an underlying asset at a specified time in the future, with its current market value. An option is a contract that gives the buyer the right to buy or sell an underlying asset at a specific price on or before a specified date.

Derivatives exchanges are legal and regulated marketplaces for trading derivatives such as options, futures, and swaps. They are platforms where buyers and sellers can trade using standardized instruments in accordance with defined rules and regulations.

Crypto derivatives exchanges are online platforms which facilitate open-source peer-to-peer (P2P) decentralized cryptocurrency trading. A crypto derivatives exchange is an online platform that facilitates trading in cryptographic assets. Crypto derivative exchanges are different from spot exchanges, where buyers and sellers of cryptocurrencies execute their orders via direct trades without using derivatives.

Crypto derivatives exchanges are a relatively new concept in the blockchain and have recently gained significant traction. They will allow traders to create prediction markets and speculate on price movements of any crypto asset without actually having to purchase it, meaning they do not need to take ownership of the underlying asset or account. There are multiple use cases for a derivatives exchange such as hedging risk or creating a synthetic long/short position.

CoinMarketCap ranks the best crypto derivatives exchanges from biggest to smallest.

Crypto Derivatives

Crypto derivatives are a way for traders to bet on the rise or fall of cryptocurrency prices without actually buying the currency. Crypto derivatives are one of the most complex and fast-growing use cases in crypto — and one of the most interesting too. For traders, offering such products makes it possible to take positive or negative positions on cryptocurrencies without having to directly own the asset.

The underlying assets of crypto derivatives can include top cryptocurrencies such as Bitcoin (the biggest crypto by market cap), Ethereum, Bitcoin Cash, Cardano and Litecoin. For example, a trader can trade on whether the price of Ethereum will go up or down without having to actually buy and hold onto Ethereum for an extended period of time.

Crypto derivatives are derived from the value of a cryptocurrency or bundle of cryptocurrencies. They can be traded via an exchange, much like stock or commodities. The exchange typically holds investor assets in escrow until a derivative contract has been fulfilled.

The top crypto derivatives exchanges are Binance, Huobi Global, ByBit, OKEx and Bitmex. The biggest crypto derivatives exchange is Binance.