You’ve heard of traders making a ton of money from crypto. Heard of terms like 10x gains and liquidation, but most of them tie back to one concept: future trading.
Future trading is the best way to make trades without owning assets. In future trading, you bet on price movements, whether the price goes up or down, and expire on certain future dates. without owning actual coins.
In 2024, after Trump won the election and promised to make America the crypto capital of the world, factors like AI trading bots, Institutional adoption, and regulatory clarity will explode the popularity of crypto futures trading.
But here is the misunderstanding of how it works. And you could lose all your money in minutes.
This beginner’s guide breaks down futures trading in simple English words. In this Article, you will learn about.
- What is future trading?
- How does it work?
- Benefits and Risks of future trading.
- Key terms, How to start future trading in 2025
- Common mistakes every beginners makes ( avoid these )
- Is future trading right for you?
What is Future Trading?
In simple words, it’s a contract to buy and sell coins at a fixed price at a future date without owning anything.
For example
- The price of Bitcoin today is 90,000$.
- I bet the price goes up to 95,000$ on the 1st of next month.
If the prediction is right. I profit from the difference.
Difference between spot and future trading.
| Difference | Spot Trading | Futures Trading |
| Ownership | Own crypto | No ownership |
| Leverage | No leverage | Up to 100x |
| Profit | Profit when the price rises | Profit whether it goes up or down |
| Risk | Low | High |
How does it work?
Before understanding future trading. You need to learn a few basic concepts.
- Long and Short Position:
In futures, you are betting on price prediction instead of buying and selling
- Long( buy ): You believe that prices go up. And if you are right. You get the profit as the price rises.
For example:
You longed for Bitcoin ( Priced at 50,000) and predicted the price is 60,000. If the bitcoin crosses the price tag before a certain date. You profit as the price rises.
- Short ( sell): You believe that the price will fall. And you make a profit as the price goes down.
Long and short positions allow the traders to make money in every market condition.
- Leverage (2x, 10X, 100x): Leverage allows you to open a large position with small capital.
For example:
you have 200$ capital and with 10x leverage you can open a position of 2000$. With bigger trade sizes, you can make a lot of profit. But if the trade goes against you. You will lose your capital within minutes. The higher the leverage is. The higher the risk is.
- Liquidation Price: The price at which the exchange closes your position automatically to prevent you from further loss.
For Example:
- You long( Buy ) and open the position of 10,000$ with 10x on Bitcoin and but he price goes down to 9000.
- You lose your margin( Initial investment ), and the exchange closes your position automatically.
- Contract type:
There are 2 types of contracts in futures:
- Perpetual Futures: The contracts with no expiry date. You can hold a position as long as you want. Mostly used by crypto traders.
- Dated Futures: Contracts with an expiry date. Mostly used by institutions.
Benefits of future trading:
Most say that the futures are for professionals. But there’s a tool that helps beginners to take profitable trades.
- Profit in bull and bear markets.
- I spot that you only make a profit when the price of the coin goes up
- In Futures, you can make a profit whether the prices go up or down.
- Big gain with Small Capital.
- Using leverage, you can open a large position with small capital.
- Like you have 100$ capital and using 10x. You can open a position of 1000$ on Bitcoin. Earn you a good profit.
- High Liquidity:
- Large exchanges like Binance, Bybit offer you high liquidity.
- It means faster execution of orders. Enable you to open and close positions easily.
Risk of future trading:
As a beginner. You must know about the risks of futures. That helps you save time and investment.
- Liquidation Risk:
- When the market moves fast against your position. The exchange will close your trade forcefully ( When the margin hits).
- In this case, you will lose all your margin and may lose more if you are not using a proper stop loss strategy.
Always use a stop loss. Before the open position
- Market Manipulation:
- The crypto market is still in its initial stages, not matured yet, and is easily manipulated by whales and influencers.
- Don’t chase the pump otherwise; sudden spikes and drops trigger liquidation, and you get liquidated and lose all your investment. Avoid overleveraging and always use a stop loss before entering the trade.
- Overtrading:
You kill your account faster due to FOMO ( Fear of Missing Opportunity ), revenge trading, or panic selling, than trading. Futures is a game of a calm mind. Before entering the trade. Make a proper plan and stick to your strategy. Add a stop loss and let the trade execute. Journal every trade. Help you highlight your mistakes, etc
- Scam and Fake exchange:
- Always trade on a trusted exchange like Binance and Bybit.
- Don’t be lazy and greedy, and stay away from unregistered exchanges and platforms.
How to start Future Trading in 2025? ( Step by Step Guide )
You are ready to dive into future trading. Follow the step-by-step guide to take your first future trade.
- Select Exchange:
Select the trusted and popular exchange. For beginners, these exchanges are best.
- Open a futures Account:
- Sign up with your email or Phone number
- Complete Verification ( Identity verification )
- Add Margins ( Funds ):
- Connect your wallet or transfer funds. These funds are your margin (the Amount you are willing to risk ) to execute a trade.
- Place long/short order:
After adding the margin, you can start trading. Select a pair like ( Btc/Usdt )
- Click and open the futures dashboard
- Long( Buy ): You believe the price goes up.
- Short ( Sell ): You believe the price goes down.
Start with low leverage, like 2x. And select the order type.
- Market order: Execute trade at the current market price.
- Limit order: Execute the trade at the price you set.
Is Future trading right for you?
Futures have great potential to grow your money exponentially in no time. But
- If you are a beginner, start with spot trading. Learn about strategies. Before starting to trade with real money. Practice on a demo account.
- If you are disciplined and a pro trader. Start with low leverage and increase as you become confident and believe in yourself. High leverage = High Risk
Trading is not gambling. You need to stay up to date with the fast pace of crypto, you need to learn how to trade, fundamentals, and technical analysis.
Conclusion:
With a small capital. You can open a large position. Help you earn good profits. High profit comes with high risk. If you treat futures like gambling. Your account will be below in a few minutes. Other factors are also below your capital, like overtrading and not using a stop loss. But with proper knowledge and practice, you can manage risk and make a dream lifestyle out of it.
In trading, knowledge is capital. Start small, learn big, and grow with control.
Are you ready to start crypto futures trading?
Open a free demo account on Binance and Bybit and start practice today. Before start real trading. do your research and never risk more than you afford.