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But think for a moment how important this tool is: earn more bitcoin when the bitcoin price drops, and you effectively do NOT have to sell to fiat anymore.So be aware of the premium or discount that is on longer dated contracts, this can allow you some arbitrage opportunities if you are patient and have the coins to apply to it.This is the most important characteristic of ANY product for a trader.The orderbook is empty and Bob wants to go long (profit off an increase in bitcoin).

Fast execution, low fees, powerful features, and responsive trading: available only on BitMEX.This means that the PNL is smoothed in USD terms, so that the contract value is maintained through price fluctuations.Bitcoin News and Search. 1 News -24 7 News -24 7 Bitcoin -1 Search.Futures contracts on the other hand have no holding fees associated.However, it is important to note, that Bitcoin Futures often trade in high premium, or a discount, which reflects the market sentiment of what the future price will be.Some of the early sections may be a little too easy for those of you who already are traders, so just navigate through to the part that is most relevant to you if you want to hit a more advanced topic in the guide.First you need to learn what futures are and the absolute basics.

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Because traders are using 20x, or up to 100x margin, sometimes the market moves so fast in one direction that they get margin-called and the system that sells their position is unable to get filled.It is a technical guide of how to trade bitcoin futures and understand what you are trading.So a general principle you should follow is to AVOID MARKET ORDERS WHEN YOU CAN.Ann then goes on BFE and she wants to short on bitcoin at market price.Bob and Ann both want to trade at Bitcoin Futures Exchange (BFE).Cross-margin will keep you from getting chopped out on moves and there are many legitimate benefits.

Inverse bitcoin contracts are usually denominated in USD terms.Termination Margin - this is the % of the position value you must stay above to avoid total liquidation It will always be less than the liquidation margin %.There is a live orderbook of traders placing buy and sell orders and you are able to realize your profit or loss prior to expiration, just as if you were buying and selling a stock.So Bob, who is long, can sell the contract at a different price to Sally, who wants to hold the long side of the contract where Ann is short.Since counterparties are only putting margin down that is a % of the contract value, the exchange also has to handle liquidation procedures in case the value of the margin is exceeded by the loss on the notional market value of the contract.Deribit offers 25x leverage This means simply that you put down 1 bitcoin and you can trade 20 on OKCoin, or 100 bitcoin on BitMEX.

Statements on this site do not represent the views or policies of anyone other than myself.They ultimately settle at price of the commodity in the future on a particular exchange, or an index that represents a basket of prices at different exchanges.

We know on the spot market that bitcoins are being bought and sold for fiat, but how the heck are bitcoins being used to trade bitcoin futures contracts.If someone market buys that limit order, an open contract is created between you and the other trader.BitMEX also has a weekly rebalancing for all their contracts, but currently their most popular product is the Daily 100x maximum leverage contract.This is how CryptoFacilities and many other traditional exchanges divide up their risk management.This is because when the price is falling, the USD value of the BTC is also falling, so the payout mathematically adjusts for this and increases as the price falls, compensating for the reduced USD value.Your profit or loss comes from the change in the price you pay.Futures are traded between customers using the orderbook, the exchanges are merely facilitating the trades, not taking the other sides of positions.If price goes up on spot, a good futures exchange will have its contracts also going up in price, and then you can sell and get out.

There are 5 well-functioningplaces to trade Bitcoin futures that daytraders and hedgers trust: CryptoFacilities.Due to many issues with our IRC channel we have now incorporated a second off-topic room to better suit the needs of the community and make.

With BitVC and OKCoin you can hold simultaneous long and short positions on the same contract.Fixed margin will isolate your margin to the individual position you have made in an instrument.However, what if price goes down really fast, and my counterparty only had a little margin backing his position.Margin fees are very expensive on Bitfinex and Kraken when you are borrowing funds and paying up to 0.1% per day to be in a position.Note that sites sometimes use slightly different systems, and where it is relevant it will be noted in this guide.OKCoin uses a custom 6-exchange index (3 chinese, 3 Western), while BitMEX, Deribit, Coinpit, and CryptoFacilities use a multi-spot-exchange Index to settle all of its contracts at expiration.This is greater than zero in order to compensate the contract holder who is forced out of position due to illiquidity.We do no endorse or promote products which we do not believe in.

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This is how you can go from a position of 0 to a negative exposure just by selling a contract.This commission comes at no charge to you and in many cases you get special deals or discounts from our links.

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Since we are stuck with this unprofessional Chinese exchange being the dominant market player in futures, we have to focus on their use of the terminology, but BitMEX and CryptoFacilities have very impressive and professional setups that use well documented procedures.Just focus on the price of the contract and whether you are LONG or SHORT.You pay a fee to enter the contract, and you pay a fee to exit the contract.

So if bitcoin price starts going up, futures traders will bid the price up.If the exchange is liquid and rational, then the market price of the contract will change as the spot market moves.Note that every futures contract has a LONG leg and a SHORT leg which balance each other out.Under no circumstances does this information represent a recommendation to buy or sell securities.

This simply terminates the contract and sends the portfolio value of the losing counterparty to the winning counterparty.She has just opened a position worth 1 bitcoin that has 5x leverage, and so has Bob.So what happens is that at settlement time of the contract, that unfilled liquidation loss to the system will be deducted from the profits of ALL traders before they are distributed.Over the past several months, there has been a number of useful, simplified flow charts that show the general demand and supply for bitcoins.