What Are Ethereum Futures?
Futures contracts are simply agreements to buy or sell an asset on a predetermined date in the future at a predetermined price. Therefore, Ethereum futures are agreements or contracts to buy or sell Ether (ETH) at a predetermined price at a predetermined time in the future.
Ethereum futures are traded on cryptocurrency exchanges that offer Ethereum futures. There are many crypto exchanges offering futures contracts across the globe. However, it is the duty of the investor or trader to ensure that they do thorough research to ensure that they don’t fall into the hands of a scam.
To avoid getting into the trap of , find out how reputable the exchange is among fellow investors/traders. In case of any issues that have been raised by traders especially when they are giving reviews about the exchange, the investor should find out more about that particular issue to find out if the exchange resolved it or it is still affecting other traders.
They should also research the exchange to find out if the exchange offers the features they are looking for. Some of the features to look out for when choosing a futures exchange where you can invest in Ethereum (ETH) futures include leverage, fees, and base currency.
BTCC crypto derivatives trading platform is one of the best futures trading platforms around the world. It has been in existence for over 9 years and it offers one of the highest leverages in Ethereum futures trading. It offers maximum leverage of 150x depending on the type of futures contract the trader chooses to trade. The platform also has relatively low trading fees compared to other futures trading platforms.
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The Benefits of Ethereum Futures Trading Over Ethereum Spot Trading
Most crypto investors are used to spot trading where one buys the actual crypto-asset speculating that its value shall appreciate so that he/she can sell it at a profit in the future. If the speculation is wrong and the value of the crypto asset drops, the investor is left with a crypto asset of less value and if he/she decides to sell it, he/she ends up making huge losses especially due to the volatility of the cryptocurrency market.
Secondly, in Ethereum spot trading, the investor has to have a crypto wallet, where he or she can store his/her Ether (ETH). And crypto wallets pose a security risk since they are prone to hacking especially if the wallet is not a cold or hardware wallet. In spot trading, most of the crypto wallets that the traders use are normally inbuilt into the peer-to-peer crypto exchanges that the investors use to do spot trading and some of them have reported cases of hacking.
To avoid all the risks involved with holding actual crypto assets, investors can invest in crypto futures like the Ethereum (ETH) futures.
Investing in Ethereum (ETH) futures does not require the investor to acquire the actual Ether (ETH) coins. Ethereum futures is a derivative product that allows traders/investors to trade the price movements of Ethereum without holding the actual Ether (ETH).
Therefore, when trading Ethereum (ETH) futures, the trader does not necessarily require a crypto wallet since they do not require to own any crypto, to begin with. However, some exchanges may ask investors to make deposits in terms of Tether (USDT), which is an ERC20 crypto token and thus may require an Ethereum compatible crypto wallet from where the investor can transfer them to the trading account with the exchange.
Besides, when trading Ethereum futures, the investor does not have to worry about being left with Ether (ETH) coins of lesser value than how he/she had purchased them since there is no one time the investor will be required to purchase the actual Ether (ETH).
Lastly, Ethereum futures trading allows traders to use leverage and thus provide an opportunity to open and hold larger trades that their account balance would allow. And if the market speculation was correct, the trades opened using leverage end up giving higher returns compared to just holding a particular crypto asset waiting to sell it when its prices soar.
Tips for Trading Ether Futures
To succeed in trading Ethereum futures, an investor/trader should:
- Choose a reputable futures trading exchange like the BTCC crypto derivatives trading platform.
- Look for a futures trading exchange that allows high leverage trading to enable you to open larger positions even if your account balance is small.
- Use Risk management trading strategies like stop loss and stop profit levels.
- Always do some analysis on the Ethereum market to ensure that you make the right market speculations.
- Avoid emotional trading since it mostly results in opening positions that have no technical or fundamental analysis basis.
- Come up with a profitable trading strategy that will enable you to identify the right trading opportunities.