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Quick Guide: Your Position in the Futures Market

When you trade futures, either going long or short, it’s important that you keep a close eye on the market, and understand any potential risks or opportunities that arise as you hold your position.

If you’ve never traded perpetual futures contracts, we would advise you to study our Beginner’s Futures Guide. If you do already have a basic understanding of trading futures, then this quick guide may be useful to you.

Basic concepts

As you know, when you trade futures you are basically betting on the direction of the underlying asset’s price. When you trade BTCUSDFP, you are looking at the price of Bitcoin, quoted in USD.

If you believe the price will go up, you go long; if you believe the price will go down, you go short.

But the level of risk that you’re exposing yourself to is dependent on how much leverage you use – the higher, the riskier; it also depends on price movements. If you trade with 50x or 100x leverage, you need to watch the market very closely. If the price moves against you, there is a risk that your position gets auto-liquidated. Essentially, that means you lose your money.

If the price does move in your favor, you want to be on time to close your position. Of course, you can place a limit order for that. However, when trading with high leverage, you still want to keep an eye on the market rather than relying on your initial trading strategy/ plan.

Let’s have a look at the quick guide:

When you trade with AAX via the web browser, be sure to look for these important specifications. As you continue to improve your trading skills and explore the futures market, it’s vital that you start paying attention and learn more about the following concepts:

  • Long versus short
  • Contracts
  • Entry price
  • Leverage
  • Margin
  • Liquidation price
  • Unrealized PnL
  • Closing a position
  • BTC settled contracts
  • Margin call

Are you ready to put your skills to the test? 

AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance. 

Open an account with AAX, or download the app, and experience the next generation crypto exchange.

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