Understand Futures Trading in One Read
2025.04.18
What is Futures Trading?
Futures trading is a type of financial derivatives trading that allows investors to go long or short based on their market predictions. This means you can profit not only when prices go up, but also when they go down. Unlike traditional spot trading, futures trading often involves leverage, enabling traders to control larger positions with smaller capital — amplifying potential gains, but also increasing risk.
The Uniqueness of Futures in the Crypto Market
In the crypto world, futures trading is even more flexible. Products like perpetual futures allow traders to hold positions indefinitely, without expiration dates. Whether in a bull or bear market, this gives investors more room to maneuver.
Main Types of Futures Contracts
Perpetual Futures
These have no expiration date. Traders can hold positions long-term. Prices usually follow an index based on spot prices and stay aligned through a mechanism called the funding rate.
Delivery Futures
These have fixed expiration dates. Traders must close their positions before the expiry, or the system will automatically settle them. These contracts are more suitable for experienced traders with strong trend predictions.
Options Contracts
Options give traders the right — but not the obligation — to buy or sell assets at a specific time in the future. Investors pay a “premium” for this right. If their market view is correct, they can earn high returns. If not, their loss is limited to the premium paid.
A Closer Look at Perpetual Futures
Perpetual futures are now the mainstream contract type in crypto trading. Their biggest feature is that they never expire. Investors can hold positions continuously, only needing to pay or receive the funding rate periodically.
Funding Rate Mechanism
The funding rate helps balance long and short positions:
- When there are more long positions, the rate is positive — longs pay shorts.
- When shorts dominate, the rate is negative — shorts pay longs.
Most exchanges settle the funding rate every 8 hours — typically at 08:00, 16:00, and 24:00. In volatile markets, the rate may even be settled hourly.
Advantages of Perpetual Futures
- 24/7 trading to match the global crypto market
- Leverage allows higher potential returns with smaller capital
- High market liquidity and efficient execution
How Futures Trading Works
Futures trading is based on borrowing capital to buy or sell assets at a set price in the future. For example:
Investor A has $10,000 and believes Bitcoin will rise (currently priced at $50,000). They borrow $90,000 through leverage and open a $100,000 futures position — equivalent to buying 2 BTC. If Bitcoin rises to $60,000, A earns $20,000 profit (20%). But if BTC drops to $40,000, losses are also magnified. That’s why setting stop-losses and managing risk is crucial.
Futures Pricing: USDT-Margined vs Coin-Margined
Futures contracts are settled in different units, mainly divided into USDT-margined and coin-margined contracts.
USDT-Margined Futures (Linear Contracts)
Settled in stablecoins like USDT or USDC. These are more beginner-friendly.
For example, BTCUSDT futures — both profit and loss are calculated in USDT, making it easy to understand.
Coin-Margined Futures (Inverse Contracts)
Settled in crypto assets like BTC or ETH. These are better for experienced traders.
They are further divided into perpetual and delivery contracts — the former has no expiry, while the latter must be settled before the expiration date.
Why Trade Futures on Echobit?
Echobit is a crypto trading platform focused on enhancing user experience. We offer perpetual futures trading for major cryptocurrencies, supporting both long and short strategies. With a streamlined trading process and fast execution, we also launch regular funding fee subsidy events — helping users lower actual trading costs while learning how to trade futures.
Whether you're a crypto beginner or a seasoned trader looking for flexible leverage options, Echobit's futures products open the door to wider market opportunities.
Risk Reminder
While futures trading offers high return potential, it also comes with high risks. Users are advised to fully understand market mechanisms before using leverage, and to set stop-loss and take-profit levels appropriately. Manage your funds wisely — only by controlling risk can you trade confidently in volatile markets.