What is Futures Trading?
Futures trading is a powerful financial tool that lets you trade on the future price of an asset. Unlike spot trading, where you can only profit when the value of an asset increases, futures trading allows you to potentially make money when prices go up or down. You have more flexibility and opportunity to capitalize on market volatility.
How Do Long and Short Positions Work?
In futures trading, you can profit from market price fluctuations by going long or short on a contract. Here’s how you can potentially profit from both sides of the market:
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Going Long: If you believe the price of a contract will increase, you can open a long position. This is similar to traditional buying, but with a futures contract. If the price goes up as you predicted, you can close your position for a profit.
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Going Short: If you anticipate that the price of a contract will drop, you can open a short position. You sell a futures contract with the expectation of buying it back later at a lower price. If the price falls, you profit from the difference.
Let's look at some examples to see how this works in practice:
Long BTC/USDT Contract:
In this example, you invested 100 USDT with 100x leverage to open a long position on Bitcoin. When the price of Bitcoin went from 40,000 USDT to 50,000 USDT, your position gained 2,500 USDT in profit.
Short BTC/USDT Contract:
Here, you opened a short position on Bitcoin, again with 100x leverage. When the price dropped from 50,000 USDT to 40,000 USDT, you profited 2,000 USDT from the downward movement.
Ready to Learn More?
Futures trading offers a flexible and exciting way to participate in the crypto market. With the ability to go long or short and use leverage, you have more tools at your disposal to manage risk and pursue profit.
To dive deeper, explore the different types of futures products available on KuCoin:
Note: Due to local regulations, users from certain countries and regions may be restricted from futures trading. Please check your local laws before engaging in any trading activities.
