Understand Futures Clearly and Safe Futures Contract Trading Tips for Beginners

What are futures? This is a question that millions of new cryptocurrency investors still find confusing. Futures (Futures) has become a popular trading tool in the crypto world, allowing you to predict price changes of assets without direct ownership. However, high profit opportunities also come with inherent risks if you do not master basic knowledge.

What Are Futures? How Do They Work?

Futures, or forward contracts, are a derivative tool that allows you to sign an agreement to buy or sell a certain cryptocurrency (Bitcoin, Ethereum, XRP…) at a specific price in the future. Unlike spot trading (immediate trading) where you must own the actual asset, futures enable you to:

• Profit from both upward and downward trends – You can open a “Long” (predicts price increase) or “Short” (predicts price decrease)
• Use leverage (Leverage) – Trade with more capital than your initial funds, from 2x to 500x depending on the exchange
• No need to own the entire asset – Just deposit a margin to open a position

Below is a clear comparison between traditional spot trading and futures:

Important Concepts When Trading Futures

To confidently start your futures journey, you need to familiarize yourself with basic terms:

• Long (Buy Position): Open a buy order if you predict the cryptocurrency price will rise soon.

• Short (Sell Position): Open a sell order if you predict the price will fall. You can profit even when the market weakens.

• Leverage (Leverage): A mechanism that allows you to control a large amount of money with a small capital. For example, with 10x leverage, you only need $100 to trade a $1,000 position.

• Margin (Margin): The amount you need to deposit into your account to open and maintain a trading position.

• Liquidation (Liquidation): When losses exceed your provided margin, the position will be automatically closed to limit the exchange’s loss. This is when you lose your entire margin.

• Funding Rate: A periodic fee (usually every 8 hours) paid between holders of Long and Short positions. This helps keep the contract price close to the actual market price.

Types of Futures You Should Know

On most modern exchanges, there are two common types of futures:

USDT-M Futures (Margin in USDT)

• Margin is paid in USDT (stablecoin)
• Profit/loss is also calculated in USDT
• Suitable for beginners because it’s easy to calculate and losses cannot exceed the margin if managed well

Coin-M Futures (Margin in cryptocurrencies)

• Margin is paid in Bitcoin, Ethereum, or other coins
• Profit/loss is calculated in the coin itself
• Suitable for experienced traders because the margin coin’s value can also fluctuate

Step-by-Step Guide to Trading Futures for Beginners

Starting futures trading is not as complicated as you think. Follow these steps:

Step 1: Create an Account and Complete Identity Verification

• Access the chosen exchange (web or mobile app)
• Click “Register” and enter email/phone number
• Create a strong password (combining uppercase, lowercase, numbers, special characters)
• Verify email or SMS
• Complete KYC (Know Your Customer) by uploading ID card/passport and selfie. This process usually takes 5-15 minutes.

Step 2: Deposit Funds into Spot Wallet

There are many ways to deposit:

• Deposit from external wallet: Copy your wallet address on the exchange, then send USDT/BTC/ETH from MetaMask or other wallets
• Buy cryptocurrencies directly: Use VISA/Mastercard credit cards or OTC (gateway)
• Transfer from another exchange: If you already have an account on another platform

Note: Beginners should deposit USDT to start, as this stable unit is easy to manage.

Step 3: Transfer Funds from Spot Wallet to Futures Wallet

• Go to Wallet or Assets
• Select Transfer
• Choose from “Spot Wallet” to “Futures Wallet”
• Select the currency (USDT) and enter the amount
• Confirm. This process usually completes instantly

Step 4: Access the Futures Area

• From the main interface, select Futures or Contracts
• Choose between USDT-M (for beginners) or Coin-M (advanced)
• You will see hundreds of trading pairs: BTC/USDT, ETH/USDT, SOL/USDT, etc.

Step 5: Set Leverage and Margin Mode

This is a very important step. Settings directly impact risk:

Choose leverage level:

• Beginners: 3x – 5x (safe, learn)
• Experienced traders: 10x – 20x
• Professional traders: 50x or higher (extremely risky)

Choose margin mode:

• Isolated (separated): Each position has its own margin. If one gets liquidated, others remain safe. Recommended for beginners
• Cross (shared): All positions share the same margin pool. More capital efficient but higher overall risk.

Step 6: Place Buy/Sell Orders

Once all settings are ready, you can place orders:

Common order types:

• Market Order: Executes immediately at current market price – fast but price may vary
• Limit Order: Set your desired buy/sell price – slower but saves fees
• Stop-Loss Order: Automatically closes the position when losses reach a certain level

How to place an order:

1. Enter the amount you want to trade (in USDT or coins)
2. Click “Buy Long” if you expect price to rise
3. Click “Sell Short” if you expect price to fall
4. Confirm and the order opens

( Step 7: Manage Open Positions

After opening a position, you will see:

• Liquidation Price )Liquidation Price###: Price at which the position will automatically close
• P&L (Profit & Loss): Current profit or loss
• Funding Rate: Periodic fee you pay/receive

Use risk management tools:

• Take-Profit: Auto-close at target profit level
• Stop-Loss: Auto-cut loss at set level
• Trailing Stop: Follow price trend to maximize profit

( Step 8: Close Orders and Withdraw Profits

When you want to end the trade:

1. Go to Open Positions
2. Select the order to close
3. Click Close All or Partial Close
4. Profits )if any### are immediately credited to your Futures wallet
5. To withdraw funds to your Spot wallet or personal wallet, go to Wallet > Withdraw, the process is very simple

Effective Futures Trading Tips

Futures trading is not just mathematical formulas but also psychological discipline and capital management:

( 1. Practice with Demo Account First

Most modern exchanges offer demo mode with virtual funds. Spend 2-3 weeks to:

• Understand how to place orders
• Get familiar with price charts
• Test trading strategies
• Important: Keep records of demo trades to compare with real trading later

) 2. Start with Low Leverage ###3x – 5x###

High leverage (100x, 200x) promises huge profits, but:

• Extremely high risk of account liquidation – A 1% adverse move can wipe out your capital
• Beginners should use 3x – 5x to have room for mistakes

( 3. Always Set Stop-Loss

This is a golden rule:

• Stop-Loss is your safety net – Limits your losses
• Never skip this step – Even for small trades

Example: If you open a Long with 1,000 USDT at BTC 45,000, set Stop-Loss at 44,000. If BTC drops there, the position closes automatically, and you lose about 2%.

) 4. Trade with a Plan, Avoid FOMO

FOMO ###Fear Of Missing Out### is a trader’s enemy:

• Don’t place orders just because a coin is rising strongly – Leads to poor decisions
• Trade only with clear analysis – Know why you open a position, what your target is, and where the risks are

( 5. Manage Capital Strictly )Position Sizing###

Basic rules:

• Risk only 2-5% of your account per trade
• Example: If you have 10,000 USDT, risk only 200-500 USDT per trade

Calculation: If account = 10,000 USDT, Stop-Loss = 2%, position size should be about 1,000-2,500 USDT.

( 6. Monitor Funding Rate

Funding Rate is the cost paid between Long and Short every 8 hours:

• High positive Funding Rate: You pay if holding Long )risky###
• High negative Funding Rate: You receive payment if holding Short (advantage)
• Check Funding Rate before holding long-term positions

( 7. Keep a Trading Journal

After each trade, record:

• Why did you open the trade?
• What was the actual result?
• If loss, what was the cause?
• Lessons learned?

This helps you identify recurring mistakes and improve over time.

) 8. Learn from Successful Traders

Many modern exchanges support Copy Trading:

• Follow traders with good track records
• Understand their logic, then develop your own style
• This is the fastest way to learn without going through all mistakes yourself

Risks You Should Know

Futures are not a quick way to get rich. Real risks include:

• Liquidation: If the market moves strongly against your position, it gets closed automatically, and you lose your margin
• Trading fees: Each open/close order incurs fees, which can erode profits
• Slippage: Actual execution price differs from your order price
• Emotional trading: Fear or greed leading to poor decisions
• Black Swan events: Unexpected events ###fork, SEC announcement### causing price jumps

Conclusion: Your Futures Journey Starts Here

What are futures? They are powerful tools that help you:

• Profit in any market (up or down)
• Amplify returns with leverage
• Participate in one of the most dynamic markets

However, this power comes with responsibility. Remember to:

1. Start with demo – Learn without risking real money
2. Use low leverage – Discipline is key
3. Manage risks – Stop-Loss is your best friend
4. Keep learning – Crypto changes fast, knowledge must be updated
5. Be patient – Successful traders don’t get rich quickly; they build wealth steadily

Your futures trading journey will be full of challenges, but with discipline, knowledge, and strong psychology, success will come. Now, start with a demo account and take cautious steps forward!