CoinEx | Things You Should Know Before Trading Futures

[CoinEx]

Since 2022 kicked off, hit by the crypto slump, spot volumes have remained sluggish. According to Exchange Review (March 2022) released by CryptoCompare, derivatives volumes increased by 4.58% to $2.74 trillion, which represents 62.8% of the total crypto market. Meanwhile, spot volumes only account for 37.2% of the market. Facing a sluggish spot market, a growing number of investors started to choose crypto derivatives like futures that could help them hedge against risks and improve capital efficiency.



How futures work
The biggest difference between spot and futures is that the latter significantly improves users’ capital efficiency. In spot trading, users can only profit from price growth, while future traders can cash in on rising or falling prices as long as the direction is right.

When trading futures, users can choose from two directions: long trades or short trades.

Long trades: User A believes that the BTC price will rise. Suppose the current BTC price stands at 40,000 USDT, and he spends 4,000 USDT on 0.1 BTC at 10x leverage. When the price rises to 45,000 USDT, he could then sell the crypto for profit. In short, this approach is called “buy first & sell later”;

Short trades: User B thinks that the BTC price will drop. Suppose the current BTC price stands at 40,000 USDT, and he spends 4,000 USDT on 0.1 BTC and sells his holding at 10x leverage. When the price drops to 35,000 USDT, he could then buy the crypto for profit. In short, this approach is called “sell first & buy later”.

Basic concepts of futures
Leverage: The possibility of gaining huge profits with a small budget is why futures trading has grown more popular among crypto investors. At the moment, most mainstream exchanges offer a maximum leverage ratio of 100x. However, as it multiplies profits, leverage also increases the risks.



Margin: When trading futures, users need to pay a small amount of money according to a certain ratio as the security deposit for contract performance, which is called Margin. More specifically, the Margin required for starting your position is referred to as Initial Margin, and a proportion of the position value required to keep the position is the Maintenance Margin.

Forced Liquidation: Once a user’s Available Margin fails to cover the Maintenance Margin, his position would be forced-liquidated.

Funding Rate: In the crypto market, futures are divided into two categories: delivery contracts and futures contracts. Delivery contracts are settled every month/quarter to make sure that the futures price and the spot price stay roughly the same over the long run. Through such regular settlements, the market price of delivery contracts trends towards the spot price. Futures contracts, on the other hand, do not have a delivery date. To ensure price stability, these contracts use the Funding Rate mechanism to minimize the price difference.

How to trade futures on CoinEx?
Step 1: Register a CoinEx account, and enter the futures page on CoinEx. New traders can click on Beginner’s Guide, watch the futures tutorial, and complete the quiz.



Step 2: Transfer funds from other accounts to the futures account;

Step 3: Select a cryptocurrency for your futures position (CoinEx features over 100 cryptos for linear contracts and 2 cryptos for inverse contracts);

Step 4: Set up a leverage ratio for your position (CoinEx now offers leverage ranging from 3x to 100x);

Step 5: Adjust the margin ratio of the position according to your own risk tolerance, as suggested by CoinEx;

Step 6: Place an order according to the order types provided by CoinEx Futures.

CoinEx Futures: https://www.coinex.com/futures

Finally, futures contracts are a special type of investment product. The futures price, affected by multiple factors, is subject to high volatility. High leverage ratios and significant risks are the most prominent features of futures. That said, users often find it difficult to master all the characteristics of futures. For beginners, plenty of futures facts remain unknown, and prudent decision-making is required before futures investments.

*The above cannot be relied on as any financial advice.

[CoinEx]

Over the past year, the trading volume of futures had surged. Thanks to the crypto bull of 2021, a wide range of decentralized projects have flourished, which has catalyzed the growth of the futures market. As the crypto bull advanced, the futures market remained popular throughout 2021. Right now, it has even surpassed the spot market and become the mainstream investment choice among crypto users. Meanwhile, the trading volume of futures has reached new highs despite the switch to a bear market. Earning multiplied returns by trading futures is one of the primary ways to profit from a bearish market.

Driven by the increasing market recognition for the prospect of crypto futures, competition in this category has intensified. As a growing number of crypto investors foray into the futures market, the major crypto trading platforms are involved in fierce competition. Today’s futures market is a big cake, and only platforms with sound products may grab more shares.

As a long-standing crypto trading platform, CoinEx started investing in the futures category a long time ago and has been committed to creating better futures products. The exchange is one of the earliest global crypto trading platforms with a full range of products and services. CoinEx took a long-term view when the spot market was flourishing and ventured into the derivatives market to provide users with versatile crypto products and services. This also laid a solid foundation for the growth of CoinEx Futures. In 2021, the trading volume of CoinEx Futures surged by 6,840% year-on-year, which was a huge breakthrough.

In a market where the major crypto trading platforms are trying everything to take more shares of the futures market, how should CoinEx stand out?



In the past, thanks to their strong resource reserve and funding capacity, large trading platforms had an absolute advantage when competing with rivals in a new field. Moreover, compared with less established platforms, the giants are also more experienced in the futures segment. At the moment, the number of futures investors is on the rise, and their requirement for futures products has also become increasingly rigorous.

Apart from market recognition, investors’ interests hinge on many other aspects, spanning the product experience, the number of trading pairs available, the rules of the funding rate, the Auto-Deleveraging (ADL) mechanism, insurance payments, and platform liquidity. At the end of the day, investors will come to realize that simple, easy-to-use products and professional, satisfying services are the crucial factors that attract them to a trading platform and persuade them to stay.

Recently, CoinEx has upgraded its slogan to “Making Crypto Trading Easier”, which indicates that CoinEx Futures will also shift towards simplicity and ease of use through improvements. By offering simple futures products, CoinEx will shatter the high threshold of futures trading as investors used to believe. Meanwhile, the exchange also aims to allow all crypto investors to trade futures with ease, moving futures trading out of the realm that’s exclusive to professional traders.

Most users who have traded futures on CoinEx are satisfied with its simple, easy-to-use features. First of all, with easy operations, convenient order placement, and clear position information, CoinEx users can trade futures through an extremely smooth process from the moment they start a position to the moment they close it. Secondly, before starting to trade futures on CoinEx, users can quickly master the key points through simulated operation tutorials provided by the platform, which help them avoid the common traps in futures trading. Finally, thanks to the all-inclusive, easy-to-use features, including TP & SL, one-click liquidation, and futures calculator, provided by CoinEx Futures, users can manage their positions effortlessly.

CoinEx now features more than 100 futures markets where users can trade both linear contracts and inverse contracts, with multiple trading pairs available. In addition, the exchange uses a unique price mechanism called the Mark Price, which is determined by the futures price on many mainstream platforms and protects users from abnormal market swings. Meanwhile, CoinEx has also introduced multiple futures mechanisms, covering the Insurance Fund and Auto-Deleveraging (ADL), to guarantee zero clawback for liquidation.

Many users have this misperception that “simple, easy-to-use products are never professional or secure”. In fact, the opposite is true — CoinEx Futures are backed by strong risk-control measures and security mechanisms, which enable smooth, secure, reliable futures trading services and help traders seize the first-mover advantage. It should be noted that CoinEx has never suffered any security breach since its inception 5 years ago. Though many of the top platforms faced scandals such as security attacks, CoinEx has managed to preserve its system security, allowing all crypto users to trade futures in a secure, steady manner on the exchange.

Security is essential to the existence and growth of crypto trading platforms, while simple, easy-to-use futures products function as the cornerstone of the general crypto market. CoinEx is all set to stand out from its rivals amidst the cut-throat competition.