What is futures trading?
Futures trades are based on futures contracts. Simply put, the buyer and seller reach an agreement to trade a specific amount of an asset at a set price on a future date.
In futures trading, participants trade not physical assets but standardized contracts issued by exchanges. These contracts specify details such as the asset type, settlement date, and trading units. Buyers and sellers trade based on these standardized terms.
A futures contract is, at its core, a legally binding agreement that defines the rights and obligations both parties must fulfill in the future. For example, if you agree to buy 1 Bitcoin at $30,000 one month from now, the trade will be settled at that price, regardless of Bitcoin’s market price at that time.
Futures trading is a type of financial derivative. Unlike spot trading—where you immediately own the physical object or asset upon purchase—futures allow you to predict price movements by:
· Going long: Buy contracts if you expect prices to rise, then sell later at a higher price for profit.
· Going short: Sell contracts if you expect prices to fall, then buy back at a lower price for profit.
Futures trading offers greater flexibility (including opportunities to profit in bear markets) but carries higher risks, making it more suitable for experienced traders.
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Happy Trading,
The WEEX Team
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