Futures contract
Also called: futures · crypto futures
Definition
A futures contract is an agreement to buy or sell an asset at a set price in the future, which lets you trade price moves with margin and leverage without holding the asset itself.
This entry is shown in English.
How Futures contract works
With crypto futures you do not buy the coin. You open a position that gains when the price moves in your favour and loses when it moves against you. You can go long if you expect a rise or short if you expect a fall, which is the main difference from buying on the spot market.
Futures are traded on margin. You post a fraction of the position value as collateral, and the exchange lets you control a larger position. That is leverage: it multiplies both gains and losses, and if your losses eat too far into your margin, the position is liquidated.
Crypto exchanges offer two main kinds. Delivery futures have an expiry date and settle on that date. Perpetual futures never expire and use a funding rate to stay close to the spot price. Contracts can also be margined in stablecoins such as USDT or in the coin itself. Contract size, tick size, fees and margin rules differ by exchange, so read the contract specification before trading.
Example
Suppose BTC trades at 50,000 USDT and you open a long futures position of 0.2 BTC, worth 10,000 USDT, using 5x leverage. You post 2,000 USDT of margin. If BTC rises to 52,500 (+5%), your profit is 0.2 × 2,500 = 500 USDT, a 25% return on margin. If BTC falls 5% to 47,500, you lose 500 USDT, also 25% of your margin, before fees.
Common mistakes
- Thinking futures losses are limited to the price change on the margin, when they are based on the full position size.
- Opening futures without knowing whether the contract is perpetual or has an expiry date.
- Using maximum leverage because the exchange allows it.
Learn and practise
FAQ
What is the difference between futures and spot trading?
In spot trading you buy and own the coin. With futures you trade a contract on its price, can go long or short, and usually use margin and leverage.
Can you lose more than you invest in crypto futures?
On most retail crypto exchanges, liquidation closes your position before your balance goes negative, and an insurance fund covers gaps. Your margin can still be lost entirely, and with cross margin more of your account is at risk.