Dated futures

Dated Futures: A Beginner’s Guide

Welcome to the world of cryptocurrency trading! This guide will explain “dated futures,” a more advanced way to trade crypto beyond simply buying and holding cryptocurrency. Don’t worry if this sounds complicated; we’ll break it down step-by-step.

What are Futures Contracts?

Imagine you're a farmer. You agree with a baker today to sell 100 loaves of bread next month at a price of $2 each. This is a basic futures contract. You *promise* to deliver the bread, and the baker *promises* to buy it at that price, regardless of what the price of bread is next month.

In the crypto world, a futures contract is an agreement to buy or sell a certain amount of a cryptocurrency at a *predetermined price* on a *specific date in the future*. It’s a derivative, meaning its value is *derived* from the underlying asset (like Bitcoin or Ethereum).

**Underlying Asset:** The cryptocurrency you're trading the future for (e.g., Bitcoin).
**Contract Size:** The amount of the cryptocurrency covered by one contract.
**Delivery Date (Expiration Date):** The date when the contract settles – when the cryptocurrency is theoretically exchanged at the agreed-upon price. Most crypto futures don’t actually involve physical delivery; they’re usually settled in cash.
**Futures Price:** The price agreed upon today for the future transaction.

What Makes Them “Dated”?

The “dated” part refers to the fact that these contracts have an expiration date. Unlike spot trading, where you buy and own the crypto immediately, futures contracts have a timeframe. Contracts are typically available for various months (e.g., March, June, September, December). Each month represents a different contract with its own price.

For example, a Bitcoin futures contract expiring in March will have a different price than one expiring in December. This is because expectations about Bitcoin’s price change over time.

Key Terms You Need to Know

**Long Position:** Betting the price of the cryptocurrency will *increase*. You buy a futures contract hoping to sell it later at a higher price.
**Short Position:** Betting the price of the cryptocurrency will *decrease*. You sell a futures contract hoping to buy it back later at a lower price.
**Leverage:** This is where things get powerful (and risky). Leverage allows you to control a larger position with a smaller amount of capital. For example, 10x leverage means you can control $10,000 worth of Bitcoin with only $1,000. While it can amplify profits, it *also* amplifies losses.
**Margin:** The amount of money you need to have in your account to open and maintain a leveraged position.
**Funding Rate:** A periodic payment (positive or negative) between long and short position holders, depending on the difference between the futures price and the spot price.
**Liquidation Price:** The price at which your position will be automatically closed by the exchange to prevent further losses. This happens when your losses exceed your margin.

How Does Dated Futures Trading Work?

Let's say you believe Bitcoin will increase in price.

1. **Choose a Contract:** You select a Bitcoin futures contract expiring in June. 2. **Go Long:** You open a "long" position, essentially betting that the price will rise. Let’s say the contract price is $60,000. You use 10x leverage with $1,000 margin. This means you're controlling a $10,000 position. 3. **Price Increases:** Bitcoin's price rises to $65,000. Your profit is ($65,000 - $60,000) * 10 = $5,000 (before fees). 4. **Close Position:** You close your position, realizing your $5,000 profit.

However, if Bitcoin’s price *fell* to $55,000, you would lose ($60,000 - $55,000) * 10 = $5,000. This is why leverage is a double-edged sword.

You can find dated futures on exchanges like Register now, Start trading, Join BingX, Open account, and BitMEX.

Spot Trading vs. Dated Futures

Here's a quick comparison:

Feature	Spot Trading	Dated Futures
Ownership	You own the cryptocurrency.	You have a contract to buy/sell in the future.
Settlement	Immediate.	On the expiration date.
Leverage	Generally not available.	Typically available (e.g., 1x, 5x, 10x, 20x).
Complexity	Simpler.	More complex.
Risk	Generally lower (but still present).	Potentially higher due to leverage.

Risks of Dated Futures Trading

**Leverage Risk:** The biggest risk. Magnified losses can quickly wipe out your account.
**Expiration Risk:** You need to close your position before the contract expires, or it will be settled.
**Funding Rates:** These can eat into your profits, especially if you hold a position for a long time.
**Volatility:** Cryptocurrency markets are highly volatile. Prices can move rapidly and unexpectedly.
**Liquidation:** Losing more than your margin can lead to automatic position closure and loss of funds.

Practical Steps to Get Started

1. **Choose an Exchange:** Select a reputable exchange offering dated futures. Research fees and available contracts. 2. **Create and Fund an Account:** Complete the verification process and deposit funds. 3. **Understand the Contract Specifications:** Carefully review the contract size, expiration date, and tick size (minimum price movement). 4. **Start Small:** Begin with a small amount of capital and low leverage. 5. **Use Stop-Loss Orders:** This automatically closes your position if the price moves against you, limiting your losses. See Stop-Loss Orders for more details. 6. **Learn Technical Analysis:** Understanding chart patterns and indicators can help you make informed trading decisions. 7. **Manage Risk:** Never risk more than you can afford to lose.

Further Learning

Disclaimer

This guide is for informational purposes only and should not be considered financial advice. Trading cryptocurrency involves significant risk, and you could lose all of your investment. Always do your own research and consult with a qualified financial advisor before making any trading decisions.

Recommended Crypto Exchanges

Exchange	Features	Sign Up
Binance	Largest exchange, 500+ coins	Sign Up - Register Now - CashBack 10% SPOT and Futures
BingX Futures	Copy trading	Join BingX - A lot of bonuses for registration on this exchange

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Register on Binance (Recommended for beginners)
Try Bybit (For futures trading)

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⚠️ *Disclaimer: Cryptocurrency trading involves risk. Only invest what you can afford to lose.* ⚠️