FTX crypto futures
You can make good money on the stock market by buying and selling various securities. The investment strategy used by a trader plays a vital role in this. Experienced speculators often practice FTX cryptocurrency derivatives trading. For example, FTX derivatives trading is often done through the FTX derivatives trading platform. We need to find out what derivatives trading is and what opportunities it offers the investor.
Varieties of derivative financial instruments
The main types of derivatives are derivative financial instruments:
- A futures contract - under the terms of this instrument, each party must fulfil its obligations at a set price and within an agreed time frame. For example, suppose the buyer - to purchase FTX crypto futures in the Philippines. Seller - to sell the underlying asset. The futures are traded on the relevant exchange, in this case, the FTX cryptocurrency derivatives trading platform. The exchange standardises all terms and conditions of this contract.
- Option contract - the writer of an option is obligated to execute the contract, and the buyer of the option has the right to either counter or refuse to execute the contract. A distinction is made between call options (CALL type - option buyer has the right to buy the underlying asset) and put options (PUT type - option buyer has the right to sell the underlying asset). The parties determine the price, date of exercise and amount of the transaction in advance. Thus, exchange options, like futures, are standardised in all respects.
- Forward contract is similar to a futures contract, but it is concluded in the over-the-counter market. The parameters of a forward contract are not standardized; the parties agree upon them.
- Swap - the underlying assets of such contracts are usually interest rates or currencies, namely FTX cryptocurrency derivatives. According to the swap terms, each party to the forward transaction has to perform a reverse auction with the underlying asset (buyer to sell and seller to buy) after a particular time.
- Other types of derivatives. These include, for example, warrants (the right to a future purchase of shares), depository receipts, and contracts for exchange rate differences.
How derivatives are traded?
Traders are market players who buy and sell derivatives on behalf of their clients or for their own accounts in the financial and commodity markets. There are three main ways to trade:
- OTC trading
- Trading in an exchange hall using open bidding with quotations being shouted out
- Trading using automated matching order systems, such as FTX crypto futures trading
Derivatives traders can operate in all markets, buying and selling futures, options, swaps, etc.
In some markets, some brokers act as intermediaries between traders and clients. Usually, brokers do not trade for their accounts but receive a commission for the trades they arrange.
Both traders and brokers need up-to-date financial information:
- information on the underlying instruments
- technical analysis
- stock prices
- news information
For example, if you want to trade FTX derivatives in the Philippines, it is, of course, convenient to do so from the comfort of your own home via a virtual stock exchange.
Open trading in a stock exchange room.
The primary purpose of an exchange is to create a safe trading environment. Exchanges permit trading and adopt rules governing, for example, trading procedures and dispute resolution. Traders or brokers working in an exchange hall communicate information about trades to each other with their voices and gestures. At exchanges such as LIFFE, CME and SIMEX, the trading hall is a bright and noisy spectacle, and trading can appear chaotic from a distance! Smaller exchange halls are less impressive, but they are also places where trading is done with voice and gestures.
The concept of OTC trading - Over-The-Counter (OTC), or 'over-the-counter', dates back to when securities were passed over a bank counter. It is now used to refer to markets that are not domiciled, where trading is less strictly regulated and which may be international. Transactions are concluded directly between the principal and the dealer by telephone or computer network, instead of trading in an exchange room.
Automated matching order systems.
Many exchanges use automated order matching systems to extend the trading session. These systems are either a joint venture or owned by the same exchange, such as Automated Pit Trading (APT).
Automated systems have the same trading rules as an exchange room. Moreover, they ensure anonymous trading, so they are sometimes called electronic brokers. The following features characterize such systems:
- users enter their buy and sell orders into a central database
- information on supply and demand is shared between all market participants
- the system identifies matching or "paired" orders suitable for a transaction based on price, volume, credit and other market rules
FTX is one of the world's top five crypto exchanges in trading volume. In the last 24 hours, the trading volume on the platform amounted to $12.1 billion, while its American division (FTX US) has $194 million.
How to start trading FTX futures and other trading tools?
- Firstly, you need to register on the website. Don't worry. The registration process doesn't take long. All you have to do is log on to the site, enter your email and password.
- Set up two-factor authentication (2FA) in the Account Security section. You can set up 2FA using Authy, Google Authenticator or SMS.
- Now, you can make a deposit and trade, but until KYC verifies you, you can withdraw no more than $1,000 from your account.
Go through complete identity verification on the Settings page to remove withdrawal restrictions.
FTX does not charge commission on deposits and withdrawals via blockchain, except for ETH, ERC20 withdrawals, and small amounts in BTC. FTX users will pay blockchain fees for all ETH and ERC20 withdrawals unless held in the FTT stack.
However, please note: We reserve the right to charge a fee of up to 0.10% of the transfer amount when executing withdrawal transactions for users who have input/output volume in fiat currencies/stablecoins in excess of the trading volume. We will notify the relevant users before applying this rule.
Small withdrawals in BTC: BTC withdrawals over 0.01 are free. Withdrawals of less than 0.01 BTC will require a fee if you have already made one (free) small withdrawal on the current day.
FTX strives to process all withdrawal requests promptly. Most withdrawal requests are processed within several minutes. However, withdrawal requests for large amounts are often processed manually by operators, which may take up to several hours.
Please note: withdrawal of stable coins may be limited by the speed of their creation and exchange (redemption). In case of withdrawal of large amounts, it may take up to 6 hours on weekdays and up to one day on weekends.
What are futures?
You can try FTX futures trading, including BTC, ETH, EOS, XRP and USDT. Each coin has three futures: a contract that expires this quarter, a contract that expires next quarter, and open-ended futures.
How do they differ from other futures?
FTX futures differ from other major cryptocurrency futures in the following ways:
FTX futures are settled in stable coins: stable coins are deposited as collateral for all futures, PNL is also accrued/written in stable coins. This means you get to earn and settle in USD without the need for a bank account; you can also use the same base currency as collateral for all contracts, which makes it easier to move positions.
FTX futures have a unique liquidity provisioning system activated when an account is close to bankruptcy, helping to prevent the distribution of losses (known as clawback).
FTX futures are characterized by sophisticated, carefully calculated margin calls, helping to prevent significant losses.
What is an open-ended futures?
Perpetual futures have no expiry date. Instead, each open-ended futures contract is financed every hour: long position holders pay short position holders a rate of [time-weighted average premium price per hour]/24. It helps to maintain the price of perpetual futures at their underlying index price without closing the position due to expiration.
Why trade derivatives?
Derivatives are profitable to trade because:
- The purchase and sale and subsequent accounting is accompanied by a relatively low level of transaction costs .
- They allow you to derive profits from both increasing and decreasing rates of the underlying asset.
- Trading is leveraged - you only have to deposit specific security (a percentage of the contract amount) to enter into a futures contract.
Traders use derivatives to profit from price movements in the underlying asset. They can always be resold before expiration. In addition to speculation, futures contracts may be entered into to hedge (insure) the risks of adverse price movements on a particular underlying asset.
As you already understand, crypto derivatives trading offers several growth prospects for a good trader.
The trick is to develop a strategy before starting crypto derivatives trading.
A trader should analyze and understand the risks associated with derivatives trading before starting a trade. One thing is for sure. It takes guts and persistence to start earning. Try to improve your skills every day and learn how to achieve different amounts of money with unfamiliar tools in everyday life. Have successful trading!