Leverage and Derivatives: Overview of KuCoin Futures in 2020

[cryptodabbin]

Hedging, derivatives, margins, leverage. These were all words you may well have seen yet probably don't know if you're not familiar with the trading and financial markets. That is fine. In this short overview, we'll look at this various terminology, what they mean, and how they relate to KuCoin Futures, a cryptocurrency contracts trading platform.

The introduction of these trading tools to the cryptosphere is an exciting idea that will have a wide-ranging influence on how users interact with cryptocurrencies and the market. Let's first take a look at what they mean, and how they work.

What Are Cryptocurrency Derivatives?
Derivatives are financial security in its most clear and simple classic definition — an instrument holding some kind of value, i.e. stocks or bonds — that derives its value from an underlying asset or asset group. What makes derivatives interesting is that it is not these assets themselves that are being traded. Instead, derivatives are contracts between two or more parties. These contracts gain or lose value based on the price fluctuations of the underlying asset and can allow traders to profit on these price movements without investing in the asset itself.

Such derivatives could be used to generate a profit on the market in a variety of ways. Initially designed to ensure fair exchange rates on widely traded commodities, derivatives are most commonly used to hedge – or minimize – risks against a specific market investment. Here’s an example:

Suppose an individual in the UK with investment accounts in British Pounds. Subsequently, this individual purchases stock of an American company on a US exchange with the trade-in US dollars. Due to different exchange rates, and because the investor's holdings are primarily in GBP, they are now exposed to exchange risk. This indicates that if British Pound's value increases in comparison to the US dollar, the earnings they could gain will be mitigated when stocks are sold for USD and converted back to GBP afterward. If the investor expects GBP's value to go up they can invest in a British Pound-linked derivative to protect against such risk and reduce the potential losses.

Trading With Leverage & Margins
The concepts of leverage and margins may be the next financial instruments worth studying. Put it simply, the leverage allows you to trade more than your trading account 's funds. This enhanced trading ability is made available by the use of a margin account and is defined as the ratio of how much you have and how much you will trade.

An example: If users decided to trade an asset worth $100 USD with no margin you'd have to put up the whole amount: $100. If you had a 1% margin threshold, however, you only need $1 USD in your account to exchange $100, and the exchange leverage would be defined as the 100:1 ratio. Leverage and margins provide the ability for traders to make money well beyond the assets they currently possess. However, it should always be noted that traders who use such tools also run the risk of greater losses than would otherwise be profitable.

Now that we have a better understanding of these concepts and how they relate to markets, let’s take a look at KuCoin Futures.

KuCoin Futures: KuCoin’s Newly Upgraded Derivatives Trading Platform
KuCoin Futures has been supporting Bitcoin perpetual and quarterly contracts as well as USDT-Margined perpetual contracts since it started operations in July 2019. KuCoin Futures was an upgrade to its former brand "KuMEX" with a view to better position KuCoin's influence in the crypto derivatives market. Announced Jun 03, 2020, the platform aims to have more resources to keep its products refined, resulting in BCH, EOS, and other contract launches. The platform will also be equipped with new features, such as cross collateral, dynamic diversions in high-frequency trading, and controls on big data risk. KuCoin Futures aims to provide its users with secure as well as fair derivative financial services.

Advantages of KuCoin Futures
KuCoin Users
KuCoin Futures has many advantages for KuCoin users specifically. Anyone with an existing KuCoin account does not need to re-register with KuCoin Futures; simply click on “Futures” from the KuCoin website to access KuCoin Futures directly. KuCoin Futures also plays a supportive role in the KuCoin ecosystem and further benefits KuCoin users. Since the official release of KuCoin Futures, the platform uses 50% of all net revenues on the KuMEX platform for KCS Bonus distribution for KCS holders.

Lite and Pro Version
Amongst other upgrades and optimizations to the KuCoin mobile app, KuCoin has released a major update wherein the app now allows users to trade derivatives on KuCoin Futures on the go. This means that users can stay up to date and access the platform wherever they are so they never miss a chance to trade. To access KuCoin Futures, users should go to the ‘Futures’ tab. It is not necessary to use KYC in KuCoin Futures, you can start trading after registration. But after completing the KYC, you can get the maximum 100x leverage, and enjoy the higher daily withdrawal limit to 100 BTC.

Along with these features, KuCoin deposits to KuCoin Futures are instantaneous, making KuCoin an easy, convenient starting point when exploring the crypto derivatives platform.

Leading Technology
Aside from the ease-of-use of the exchange, transparency and security platform can be also an important factor for users, especially for new starters to make a decision. To make users feel secured and gain trust in their trust to trade on the platform, KuCoin Futures was the only futures trading platform supporting level 3 market data that offers all-round market news pushes to ensure the openness and transparency of data. KuCoin's security defense builds a security depth defense system from four levels: organization system, management system, technical system, and execution system. The platform also has the big data risk control platform which can detect the abnormal behavior of users in real-time, and perform early warning and interception processing.

Lowest Maintenance Margin Rate
Low maintenance margin rate means it is less likely to get liquidated on KuCoin Futures when opening positions under the same margin and price which will bring great benefits for users. Meanwhile, the overall liquidation is higher, which helps to ensure the prices of extreme markets are reasonable. Also, to ensure the trading experience under extreme market conditions, the update frequency of KuCoin's market price is 1/s to maintain accuracy despite price changes.

Trading On KuCoin Futures
In terms of usability, and the range of features and functionality accessible to traders, the cryptosphere is still behind traditional markets in several aspects. An important step in the further development of crypto markets is the development of these more advanced trading platforms, such as KuCoin Futures, which provide useful and different trading tools. These tools can improve the possibility of a trader to benefit from such markets and thus can actually bring more users and promote the entire ecosystem. KuCoin Futures is an interesting project and worth further research for anyone interested in the opportunities that derivatives, leverage, and margin trading offer.

To further promote and popularize the influence of KuCoin Futures, the platform has rolled out various programs like affiliates, trial fund, and more for users to benefit potentially. It'll only take 30s to create an account and get your free beginner package!
https://land.kucoin.com/brand-upgrade-program?lang=en_US