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What is COIN-margined Futures and How to Trade COIN-margined Perpetual Futures on XT Futures


<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">Cryptocurrency futures grid trading</a>&nbsp;is a strategy that uses an algorithm to place multiple buy and sell orders at various intervals. The goal of grid trading is to maximize profits while minimizing risk. It’s one of the most popular strategies used by traders due to its consistency and ability to eliminate emotion from the equation. In this article, we will discuss what crypto futures grid trading is, how it works, who can make use of it, and its rewards.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597630744601" alt="futures-grid-trading-cover-en.png"></figure>



<h3 class="wp-block-heading"><strong>Contents of the article:</strong></h3>



<p><a href="#h2-1">What is crypto futures grid trading?</a></p>



<p><a href="#h2-2">How does futures grid trading work?</a></p>



<p><a href="#h2-3">Who can make use of futures grid trading?</a></p>



<p><a href="#h2-4">What are the benefits of using futures grid trading?</a></p>



<p><a href="#h2-5">What are the risks associated with grid trading?</a></p>



<p><a href="#h2-6">How to use grid trading strategy on XT Futures?</a></p>



<h2 class="wp-block-heading" id="h2-1">What is crypto futures grid trading?</h2>



<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">Futures grid trading bots</a>&nbsp;enable sophisticated investors to take their futures trading capabilities to the next level. The powerful, automated system executes pre-defined trades based on established parameters and a set of orders placed both above and below an asset’s reference market price – allowing for precise control over risk management without human intervention.</p>



<p>Investors often feel powerful and conflicting emotions when dealing with money, from the exhilaration of a big win to despair over losses. Such strong feelings can interfere with an investor’s strategy but are hard to suppress – until now! Enter trading bots: computer programs that transact on behalf of investors and offer them leverage in futures markets without feeling any fear or greed themselves. By taking these decisions out of human hands, they help give traders stability through volatile market conditions as emotions stay firmly at bay.</p>



<h2 class="wp-block-heading" id="h2-2">How does futures grid trading work?</h2>



<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">Futures grid trading</a>&nbsp;is a type of trading that uses bots for automated trades. These bots are programmed to divide large futures contracts into smaller “grids” and execute buy/sell orders at several prices across the grid to get a better price than the traditional market order approach of buying or selling at one set price. The buy/sell orders are placed slightly above and below the current futures contract price, so whatever market direction, there’s usually an opportunity for a profitable outcome. The futures grid trading bot monitors the prices throughout the day and makes new orders as appropriate depending on where prices move. This allows traders to take advantage of small inefficiencies in the futures markets without having to be constantly monitoring them themselves.</p>



<p>For example, using grid trading, a trader could place buy orders for BTC at every 1,000 USDT below the current market price, and sell orders at every 1,000 USDT above the market price.</p>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>sell</td><td>$22,000</td></tr><tr><td>sell</td><td>$21,000</td></tr><tr><td>current market price</td><td>$20,000</td></tr><tr><td>buy</td><td>$19,000</td></tr><tr><td>buy</td><td>$18,000</td></tr></tbody></table></figure>



<h2 class="wp-block-heading" id="h2-3">Who can make use of futures grid trading?</h2>



<p>Futures grid trading can be used by anyone who has access to reliable trading platforms such as&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>. It is suitable for all types of traders from beginners to experienced professionals as it does not require complex technical analysis skills or deep understanding of fundamental analysis techniques like other forms of trading do.</p>



<ol class="wp-block-list">
<li>Short sellers: futures traders are often faced with a daunting decision: go long or short? While the prospect of going short can be extremely enticing, paired with potentially higher profits – it also holds much greater risk. Enter Futures Grid Trading; by helping to manage and control risks associated with trading one’s asset portfolio, grid trading works best when markets become turbulent and prone to significant volatility.</li>



<li>Margin trading is a great way to potentially amplify returns – but it also comes with the inherent risk of potential greater losses. For traders looking for profitable, yet secure opportunities however, Futures Grid has them covered; adjustable limits allow investors to customize their experience according to their own specific criteria and reduce exposure at whatever level they see fit.</li>



<li>Tired of non-stop monitoring? Breathe a sigh of relief! Futures Grid Trading on&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;liberates traders from having to stay glued to the screen around the clock – unlocking freedom while still capitalizing on opportunities in an ever-changing crypto market that never sleeps.</li>



<li>Beginners: as a newcomer,&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">Futures Grid Trading</a>&nbsp;is your golden ticket – it’s designed with safety in mind so you can gradually get accustomed to market fluctuations. XT Future’s Auto-Mode will set up all the basics for you based on past trades – no headache or guesswork required!</li>
</ol>



<h2 class="wp-block-heading" id="h2-4">What are the benefits of using futures grid trading?</h2>



<p>Futures grid trading offers numerous advantages:</p>



<ul class="wp-block-list">
<li>Consistency – Since it automates the entire process traders do not need to worry about making emotional decisions which could lead them astray from a successful trade setup;</li>



<li>Low capital requirements – Since it does not require large amounts of leverage or margin requirements for each trade, it can be used with very little capital;</li>



<li>Low risk – As it only involves placing small trades with limited exposure per trade; risk management is built into this type of strategy via stop-losses/take-profits being preset ahead of time, traders do not have worry about taking unnecessary risks which could lead them down a path towards financial ruin if left unchecked;</li>



<li>Automation – Once parameters have been set up correctly, all trades will execute automatically;</li>



<li>Versatility – It can be used in any cryptocurrencies pairs etc., allowing traders to diversify their portfolios easily;</li>



<li>Flexibility – Traders can adjust their strategies based on market conditions without having to manually execute every single trade; Additionally, since multiple orders are placed simultaneously with predetermined amounts, it allows traders the flexibility to take profits quickly should one side move favorably without having to wait until all positions are closed out in order to realize gains (or losses);</li>



<li>Diversified returns – As profits are taken from both rising and falling markets simultaneously;</li>



<li>Increased efficiency – Trades are executed quickly allowing traders to take advantage of short-term opportunities quickly before they pass by.</li>
</ul>



<h2 class="wp-block-heading" id="h2-5">What are the risks associated with grid trading?</h2>



<p>Although futures grid trading can be a highly profitable form of futures trading, it also carries with it significant risks which must be understood before engaging in the practice. Grid trading can produce large losses if the margin requirements cannot all be met when the futures position moves against you, or if you are unable to exit your positions at a desired price point. Additionally, futures markets are highly volatile and require traders to constantly adjust their grids as prices move. Finally, futures grid trading is not suitable for traders who lack sufficient capital or experience due to the involved risks associated with fast-changing futures prices.</p>



<h2 class="wp-block-heading" id="h2-6">How to use grid trading strategy on XT Futures?</h2>



<p>Here’s how you can set up your futures grid trading strategy:</p>



<p>1. On the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT.COM Futures</a>&nbsp;page, click [Futures Grid] on the navigation bar.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597622129817" alt="1-guide-en.png"></figure>



<p>2. The next step is to select the contract on which you would like the futures trading bot to be deployed. We will use a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTCUSDT perpetual contract</a>&nbsp;as an example.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597627028121" alt="2-guide-en.png"></figure>



<p>3. From the right-hand sidebar, you can choose between “Auto” mode (to automatically generate recommended parameters according to technical analysis of the symbol price) and “Manual” mode (to manually customize your grid parameters).</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597623313177" alt="3-guide-en.png"></figure>



<p>The Auto option is great for traders of all levels who want to maximize their opportunities with a bot. Whether you’re just getting started or have been trading for years, this feature can help increase your success rate. If you choose “Auto”, you’ll need to decide the following options:</p>



<ul class="wp-block-list">
<li>Order Direction: Neutral, Long, or Short</li>
</ul>



<p>Neutral：Neutral Mode unlocks the potential of range-bound markets. This feature enables traders to take advantage of short and long futures contracts without any existing positions – simply set your base price, then sit back as buy or sell orders are placed when market prices breach it. With a clever combination of long/short trades based on whether they’re above or below the specified base value, you can confidently lock in maximum profits from sideways movements.</p>



<p>Long: In a volatile market, the long-mode strategy can be an effective tool to capitalize on rising prices. By entering into long positions when they’re formed and capturing profits as soon as possible, traders can take advantage of positive fluctuations in asset price. For instance, a trader who is bullish on Bitcoin might use a long grid strategy on&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">BTCUSDT</a>.</p>



<p>Short：For traders looking to take advantage of a bearish market, short mode can be the ideal solution. With this strategy, positions are automatically taken at current prices and profits realized when things start heading south. It’s perfect for those who want to capitalize on falling markets.</p>



<ul class="wp-block-list">
<li>Initial margin: the minimum equity required to open any new position</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597627906329" alt="4-guide-en.png"></figure>



<p>4. Alternatively, you may choose to specify all the key parameters manually. For Manual option, you’ll need to choose the trading parameters as follows</p>



<ul class="wp-block-list">
<li>Order direction. On the grid trading panel, select the grid direction from three options – Neutral, Long, or Short.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597628455833" alt="5-guide-en.png"></figure>



<ul class="wp-block-list">
<li>Grid type. There are two options for constructing the grid – arithmetic mode and the geometric mode.</li>
</ul>



<p>Arithmetic mode: Each grid has the same price difference. For example, if the interval is 5,000 USDT. The price of the next order will be 5,000 USDT higher than the previous price.</p>



<p>Geometric mode: Each grid has an equal price difference ratio. For example, if the interval is 17.61%. The price of the next order will be 17.61% higher than the previous price.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597624383769" alt="6-guide-en.png"></figure>



<ul class="wp-block-list">
<li>Price range. Get ready to maximize your earning potential with a 24-hour BTC price prediction strategy. By setting an anticipated range of $20,000 -$30,000 for the next day, you can let the grid trading bot do its magic and automatically place buy orders as prices dip towards $25K and sell off when they begin rising again, in order to make a profit from the price fluctuations.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597629103513" alt="7-guide-en.png"></figure>



<ul class="wp-block-list">
<li>Grid count. Futures grid trading allows you to decide exactly how many orders are placed within your desired price range, empowering you with control over how much profit is made from each trade – whether that’s many smaller profits or fewer larger ones. A larger grid means more trades but smaller profits per trade; alternatively, fewer grids mean bigger returns on each transaction.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597625201433" alt="8-guide-en.png"></figure>



<ul class="wp-block-list">
<li>Initial margin. When using futures grid trading strategy on the market, it’s essential to set an initial margin that fits your grids, leverage and price range. For optimal success results, keep in mind that having close-knit grid margins can significantly raise the required initial margin.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597625598105" alt="9-guide-en.png"></figure>



<ul class="wp-block-list">
<li>Advanced features. The grid trading bot also comes with enhanced functions that enable you to better manage your positions and risk. Grid trading bot’s Trigger Price function helps set the stage by allowing you to establish predetermined market conditions, so when they are met, the system will jump into action. Get ready for an automated approach that customizes itself according to your personal criteria.</li>



<li>Additionally, you can set a stop-loss for your grid positions. Maximize your gains and safeguard against unexpected losses with stop-loss orders on grid positions! This feature will automatically close out an entire position when the market turns sour, helping to protect you from facing sizable loses.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597630221849" alt="10-guide-en.png"></figure>



<h3 class="wp-block-heading">&nbsp;</h3>



<h3 class="wp-block-heading" id="h_01JD8WXVPT6Q0AWA40P6VE1TR0">About XT.COM</h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is Futures Grid Trading and How to Do Futures Grid Trading on XT Futures


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px"></figure>



<h3 class="wp-block-heading"><strong>Contents of the article:</strong></h3>



<p><a href="#h2-1">What are futures funding rate?</a></p>



<p><a href="#h2-2">Why are futures funding rates important?</a></p>



<p><a href="#h2-3">What is futures insurance fund (risk protection fund)?</a></p>



<p><a href="#h2-4">How does futures insurance fund (risk protection fund）work？</a></p>



<p><a href="#h2-5">What are the differences between index price and mark price?</a></p>



<h2 class="wp-block-heading" id="h2-1"><strong>What are futures funding rate?</strong></h2>



<p><a href="https://www.xt.com/en/futures/information/fund-rate" target="_blank" rel="noopener">Crypto funding rates</a>&nbsp;are a dynamic system used by exchanges which determine the funding rate at specific intervals. It works by tracking supply and demand on the exchange and then setting a funding rate to maintain equilibrium. This&nbsp;<a href="https://www.xt.com/en/futures/information/fund-rate" target="_blank" rel="noopener">funding rate</a>&nbsp;is then used to automatically balance trader positions by crediting or debiting crypto accounts, depending on the direction of their trades. By doing this, the funding rate helps to ensure fair trading conditions while also preventing potential market manipulations or price distortions due to large trader positions.</p>



<p>Calculating funding rates in&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">crypto perpetual contracts</a>&nbsp;can be a complex process. This is because funding rates are constantly changing and there are a variety of factors that contribute to these changes. Some of the factors that can affect funding rates include the price of the underlying asset, the interest rate of the funding currency, and the liquidity of the market. funding rates can be either positive or negative, and this will impact whether traders are able to profit from their positions.</p>



<p>On our&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;platform, funding rates (highlighted in red) and a countdown to the next funding (highlighted in yellow) are displayed as below. Volatility can cause the prices of a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual contract</a>&nbsp;and its mark to fluctuate considerably. In such cases, traders must pay attention to both spread width and premium level; wide spreads typically mean high premiums while narrow ones come with low premiums. A positive funding rate signals that long positions are at an advantage as their price is higher than the mark’s, resulting in paying for the shorts. The opposite holds true when rates are negative – it’s then up to short holders’ wallets rather than those of longs’.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942056194329" alt=""></figure>



<h2 class="wp-block-heading" id="h2-2"><strong>Why are futures funding rates important?</strong></h2>



<p>Crypto funding rate plays an important role in the health and stability of the cryptocurrency market. This funding rate is the cost that traders pay one another for using margin trading to trade cryptos with leverage. Essentially, Funding Rates are designed to encourage traders to take positions that keep perpetual contract prices line in with spot markets. Not only does this help keep the markets liquid, it creates more price discovery which can lead to efficient pricing overall – this helps both buyers and sellers transact at a fair price. Moreover, funding rates prevent large swings or over-leveraging from destabilizing the crypto markets.</p>



<p>Funding rates can mean a world of difference for any trader; high leverage could quickly deplete one’s profits or even lead to liquidation. However, by developing strategies around funding opportunities and taking advantage of range-bound markets, savvy traders may never fall into the ‘high risk’ category again! By monitoring rate fluctuations carefully and acting accordingly with their positions in perpetual contracts versus spot prices, success is almost guaranteed – no matter how low volatility gets.</p>



<h2 class="wp-block-heading" id="h2-3"><strong>What is futures insurance fund (risk protection fund)?</strong></h2>



<p>Insurance funds are a vital component of&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives trading</a>, safeguarding traders from disastrous losses. Working like an impenetrable safety net, insurance funds serve to protect bankrupt traders while simultaneously securing the profits of those in-the-black – offering peace of mind to all involved parties. Not only do they guard against large losses from leveraged positions, but also guarantee full payout to winning traders, acting as a defensive barrier against uncontrollable market forces such as leveraged trade contract loss exceeding initial margins.</p>



<p>The&nbsp;<a href="https://www.xt.com/en/futures/information/risk-fund" target="_blank" rel="noopener">XT Risk Protection Fund</a>&nbsp;is an innovative solution to protect traders from costly forced liquidations due to bankrupt counterparties. By using the margin of non-bankrupt users, it offers a buffer against losses when high leverage trades are affected by market volatility or other factors. This fund helps safeguard profitable positions and ultimately gives traders peace of mind in their investments.</p>



<p>You can access the insurance fund (risk protection fund) balance of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd" target="_blank" rel="noopener">ETH/USD</a>, and all other futures contracts by clicking [Information] – [Provision of risks] on the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;trading interface. Alternatively, you can directly visit [<a href="https://www.xt.com/en/futures/information/risk-fund" target="_blank" rel="noopener">Provision of risks</a>].</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942056195097" alt=""></figure>



<h2 class="wp-block-heading" id="h2-4"><strong>How does futures insurance fund (risk protection fund) work?</strong></h2>



<p>Let’s begin with an examination of how the&nbsp;<a href="https://www.xt.com/en/futures/information/risk-fund" target="_blank" rel="noopener">XT Futures provision of risks</a>&nbsp;works:</p>



<p>In uncertain times, the provision of risks (insurance fund) proves its worth by preventing auto-deleverage liquidations. Trader A and Trader B both took a leap of faith by entering into the same&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT perpetual futures</a>&nbsp;long position despite varying market conditions.</p>



<p><em>The following events unfold on Trader A’s account:</em></p>



<p><em>1. Trader A goes long BTC/USDT at $8,000, with a liquidation price of $7,700 and a bankruptcy price of $7,600.</em></p>



<p><em>2. As BTC prices plunged beyond $7,700, Trader A enters liquidation and the liquidation engine places an immediate order to sell above $7,600 (the bankruptcy price).</em></p>



<p><em>3. The liquidation order is filled at $7,650, a liquidation fee is charged to Trader A.</em></p>



<p><em>4. The liquidation fee is transferred to the provision of risks.</em></p>



<p><em>Meanwhile, the following events play out in Trader Bs account:</em></p>



<p><em>1. Trader B goes long at $8,000 with a liquidation price of $7,700 and a bankruptcy price of $7,600.</em></p>



<p><em>2. Due to a sudden jump in volatility, the market price is now at $7,550, below the bankruptcy price.</em></p>



<p><em>3.&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;takes over the remaining positions from the bankrupt trader whose account is in negative equity.</em></p>



<p><em>4. Through its provision of risks, XT Futures offloads them onto the market progressively.</em></p>



<p><em>5. The liquidation engine places an immediate order to sell and fills the order at $7,500.</em></p>



<p><em>6. As Trader B is already in negative equity, XT Futures’ provision of risks covers the deficit. As a result, ADL has been avoided.</em></p>



<h2 class="wp-block-heading" id="h2-5"><strong>What are the differences between index price and mark price?</strong></h2>



<p>Index Price is the average market price of cryptocurrencies on major spot crypto exchanges in&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual futures</a>. It takes into account an anticipatory mechanism to make sure prices swing within a reasonable range, and it’s also the main factor behind determining mark price.</p>



<p>Mark Price refers to an estimated true value of a contract. It is the price used for mark-to-market PnL calculation and platform liquidation; Mark price is also designed to be fair and manipulation resistant.&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;uses Mark Price as a trigger for liquidation.</p>



<p>You can access the index price of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd" target="_blank" rel="noopener">ETH/USD</a>, and all other futures contracts by clicking [Information] – [Index Price] on the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;trading interface. Alternatively, you can directly visit [<a href="https://www.xt.com/en/futures/information/index" target="_blank" rel="noopener">Index Price</a>].</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942071981977" alt=""></figure>



<p>You can access both the&nbsp;<strong>[index price]</strong>&nbsp;and&nbsp;<strong>[mark price]</strong>&nbsp;of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd" target="_blank" rel="noopener">ETH/USD</a>, and all other futures contracts from futures trading interface.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15800099720601" alt="index-mark-price-en.png"></figure>



<h3 class="wp-block-heading" id="h_01J6AECBDFVHNEY4M3Q6QJ08ZW">About XT.COM</h3>



<p>Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Are Futures Funding Rate, Insurance Fund, and Index Price?


<p>Quarterly futures contracts are an important tool for traders looking to capitalize on short-term price movements in a given market. In this article, we’ll provide an overview of quarterly futures and explore the differences between these contracts and perpetual futures. With this knowledge, traders can decide which type of contract is better suited to their trading style and goals.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031595143321" alt="quarterly-futures-contract-cover-en.png"></figure>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What are quarterly futures contracts?</a></p>



<p><a href="#h2-2">How do quarterly futures contracts work?</a></p>



<p><a href="#h2-3">What are the benefits of quarterly contracts?</a></p>



<p><a href="#h2-4">What are the differences between quarterly futures and perpetual futures?</a></p>



<p><a href="#h2-5">How to trade quarterly futures contracts on XT.COM Futures</a></p>



<h2 class="wp-block-heading" id="h2-1">What are quarterly futures contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">Quarterly futures contracts</a>&nbsp;are derivatives that provide holders the ability to enter into a contract with the seller to buy or sell an asset at a particular future date quarterly. Unlike other longer-term futures contracts, quarterly futures contracts are typically used to lock in pricing and avoid price fluctuations in more volatile markets. They function similarly to&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">perpetual futures contracts</a>, but represent smaller and more frequent transactions, allowing traders better market access while quickly capitalizing on opportunities they otherwise may not have had without quarterly contracts.</p>



<p>Quarterly futures contracts provide investors with access to markets and investments they would not normally have access to, as well as providing protection against volatile market conditions. While quarterly futures contracts can be highly lucrative, as with any investment there is always a risk involved and therefore it is important for investors to educate themselves about the market and the specific quarterly futures contract before making any decisions.</p>



<h2 class="wp-block-heading" id="h2-2">How do quarterly futures contracts work?</h2>



<p>Quarterly futures are a popular form of investment, with an expiration date that must be observed. These contracts expire on the last Friday of every quarter, ensuring an easy way for investors to keep track and plan their strategies accordingly; just like any other standard future contract. A Bi-quarterly futures is generated on the third Friday from the last of each quarter month (March, June, September, December) and expires on the last Friday of a half-year. The most recent&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">BTCUSDT Quarterly 0331</a>&nbsp;– will settle on March 31st 2023 in cash (USD) allowing traders who have acquired positions before expiry ample time – as well as security – when preparing for settlement. The most recent&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_bi-quarter" target="_blank" rel="noopener">BTCUSD quarterly 0630</a>&nbsp;– will settle on June 30th 2023. Alternatively, the contacts can also have physical settlement, which means traders can literally buy one bitcoin for the predetermined price.</p>



<p>If the trade isn’t going as planned, traders have the choice of closing their positions (long or short) before expiration. The resulting profits and losses (PnL) would be calculated by comparing the opening price to that at closure. For example, invest in a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">BTCUSDT quarterly 0331</a>&nbsp;and you’ll be set for the quarter. By buying one BTCUSDT quarterly 0331 contract at $30,000 now, you’ll lock-in that price come the expiry date on 31 March – regardless of how much Bitcoin decides to fluctuate before then. The contract will be settled on March 31 and the traders will buy one bitcoin for $30,000.</p>



<h2 class="wp-block-heading" id="h2-3">What are the benefits of quarterly contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">Quarterly futures contracts</a>&nbsp;can be beneficial for traders because they provide flexibility and opportunities to trade at regular intervals. Unlike other futures contracts, quarterly futures have a particular expiration date that is quarterly rather than the typical yearly expiration. This means that traders are able to plan their trading strategies around a quarterly structure instead of waiting a long-term before they can make changes. Quarterly futures offer more frequent price discovery events which enables traders to react to market forces in a timely fashion and adjust their trading positions accordingly.</p>



<p>Quarterly contracts also offer liquidity and lower margin requirements, as well as harmonized global standards for pricing and risk management. This can make quarterly contracts an attractive option for capitalizing on opportunities in the global market. In addition, quarterly futures provide more liquidity opportunities as trades can be made on each quarter’s delivery so there is often a greater number of participants in the market compared with perpetual contracts. Overall,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">delivery futures</a>&nbsp;are appealing for those looking for short-term trading opportunities as well as those who prefer frequent trading and renewed exposures over longer durations.</p>



<h2 class="wp-block-heading" id="h2-4"><a></a>What are the differences between quarterly futures and perpetual futures?</h2>



<h3 class="wp-block-heading" id="h_01JD8XAXWPDFE1GVB7GAPP5S94">Expiration Date</h3>



<p>The most obvious difference between these two types of futures is their expiration date.&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">Quarterly delivery futures</a>&nbsp;are designed to expire at a certain point in time – usually on the last Friday of the quarter. This means that if you hold a position in a quarterly future until its expiration date, your position will be automatically closed out at the prevailing market price. On the other hand,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual futures</a>&nbsp;never expire; instead they use a rollover system to extend positions that have been open for longer than 8 hours (or 16 hours in some cases).&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWPY4X1JRER35ZYJK1K">Rollover Process</h3>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">Quarterly futures trading</a>&nbsp;does not require any type of rollover process because they expire on their own accord after 3 months. However, with&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">perpetual futures trading</a>&nbsp;there is an additional process called “rollovers” which keep positions open beyond 8 or 16 hours. These rollovers involve transferring part (or all) of your position from one expiry date to another one month later. This allows traders to keep their positions open for extended periods of time without having to close them out prior to the expiry date.</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQ3CFKCMA77HNNVAVT">Funding Fee</h3>



<p>Another key difference between these two types of contracts lies in their funding fee structure.&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">Quarterly futures contracts</a>&nbsp;typically do not include any kind of funding fee as they are designed to be held until their expiration date and then liquidated at that point in time. However,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">perpetual futures contracts</a>&nbsp;do include a funding fee which is charged every 8-hours or 16-hours depending on the contract specification; this fee helps incentivize market makers who provide liquidity by offsetting some of their risk exposure.&nbsp;&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQJ9SN6GHPHKS87AA8">BTC vs USDT Margined</h3>



<p>Both quarters and perpetuals can be margined either in Bitcoin (BTC) or Tether (USDT). While both BTC and USDT margins offer similar levels of liquidity and exposure, there are some important differences between them;&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">BTC margin</a>&nbsp;offers more potential profit potential due to its higher volatility while&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">USDT margin</a>&nbsp;offers more stability due to its lower volatility but also lower potential profits compared to BTC margin trades.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQ3XYCJ4S02NWY28TF">Trading Strategy</h3>



<p>Finally, it’s important to consider how these different types of contracts fit into your overall trading strategy as well as what type of risk profile you prefer when selecting one over the other. If you prefer shorter-term trades with less volatility and risk then quarterly contracts may be better suited for you; however if you prefer more flexibility in terms of duration and exposure then perpetuals may be the better choice for you given their higher leverage options and ability to rollover positions indefinitely.</p>



<h2 class="wp-block-heading" id="h2-5">How to trade quarterly futures contracts on XT.COM Futures</h2>



<p>Step 1:&nbsp;<a href="https://www.xt.com/en/accounts/login" target="_blank" rel="noopener">Login in</a>&nbsp;your XT.COM account and click “Delivery” under “COIN-M Futures” from “Derivatives” section on the navigation to enter the XT futures&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">COIN-margined delivery contracts</a>&nbsp;trading page.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031600087705" alt="1-step-en.png"></figure>



<p>Step 2: On the futures trading page, you can place trading orders on the right of the screen.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031648670873" alt="2-step-en.png"></figure>



<p>Step 3: The coin-margined delivery contract is a quarterly or bi-quarterly contract denominated in a certain kind of digital asset (such as BTC or ETH).&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;currently offers&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">BTC/USD quarterly</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd_quarter" target="_blank" rel="noopener">ETH/USD quarterly</a>, and many other&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">delivery contracts</a>&nbsp;trading pairs. Here, we will use BTC USD quarterly trading as an example.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033362070937" alt="3-step-en.png"></figure>



<p>Step 4: If you don’t have enough funds in your Futures account, you can easily transfer assets from Spot to Futures account with just one click. If you don’t have funds on the Spot side either, you can&nbsp;<a href="https://www.xt.com/credit/debitCard" target="_blank" rel="noopener">buy crypto</a>&nbsp;directly with fiat currency.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033362588825" alt="4-step-en.png"></figure>



<p>Step 5: When your futures account has the required funds, you may place your limit order by setting price and the number of contracts you would like to purchase. You may then click “Open Long” or “Open Short” to complete your order. A long position means you expect the market to rise, while a short position means you expect it to fall.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033427431833" alt="5-step-en.png"></figure>



<p>Step 6: You can modify leverage of long or short positions using cross-margin mode or isolated-margin mode.&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;supports two different margin modes to accommodate differing trading strategies. They are Cross Margin mode and Isolated Margin mode. By default, all traders start in cross margin mode.</p>



<ul class="wp-block-list">
<li>Isolated Margin: Isolated Margin allows traders to manage their risk in a more efficient way by allowing only part of their position to be automatically liquidated if there is a significant price movement. Isolated Margin also provides traders plenty of liquidity while they maintain open positions, allowing them to make more strategic decisions when the markets move quickly.</li>



<li>Cross Margin: Cross Margin is an optional margin mode that reduces the margin requirement for traders, allowing them to take on larger positions without having to deposit extra funds into their account. Cross Margin works by allowing traders to spread their total account collateral over all of the positions held in the same contract. Therefore, Cross Margin ensures that traders have adequate margin levels across all positions in a particular contract and can allow them to increase their position size if desired.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031601762969" alt="6-step-en.png"></figure>



<p>Step 7:&nbsp;You can choose your order type using limit order, market order or trigger order.</p>



<ul class="wp-block-list">
<li>A limit order lets you set a minimum price for the order to execute</li>



<li>A market order will execute immediately at the current best available market price</li>



<li>A trigger order lets you specify the stop price an order should execute. If the market order price falls to your stop price, your order will trigger a sell</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031653128089" alt="9-step-en.png"></figure>



<p>Each order you place specifies a Time in Force (TIF) along with the Order Type. TIF indicates how long the order will remain active before it is executed or before it expires. Available TIF options may change, depending on the order type, exchange and contract.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031703770777" alt="10-step-en.png"></figure>



<p>Step 8:&nbsp;During the futures trading, if you need to perform some basic arithmetic, you can use the provided calculator function on the futures trading page.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031650306585" alt="7-step-en.png"></figure>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031637968409" alt="8-step-en.png"></figure>



<h2 class="wp-block-heading" id="h2-6">Final Thoughts</h2>



<p>In conclusion, understanding the differences between quarterly futures and perpetual futures can help traders determine which type of contract best suits their individual needs when it comes to trading derivatives markets like those offered through&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT futures exchange</a>. While both types offer advantages depending upon individual preferences such as shorter expiration times for those seeking shorter commitments or margin trading capabilities for those looking leverage trades with increased potential profits but also higher risk profiles; understanding how each works before entering any position will ensure that you make informed decisions when entering into any kind of derivative contract regardless if its based off quarters or perpetuity!</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQSEHWPRCG06P2V5YT">About XT.COM</h3>



<p>Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Are Quarterly Futures and What Are the Differences Between Quarterly Futures and Perpetual Futures?


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px"></figure>



<h3 class="wp-block-heading" id="h_01JA8EGN66HXDKEC1K7VQPFJ03"><strong>Content of this article:</strong></h3>



<p><a href="#h2-1">What is XT Futures One-Click Reverse?</a></p>



<p><a href="#h2-2">How to Use One-Click Reverse on the Web?</a></p>



<p><a href="#h2-3">How to Use One-Click Reverse on the App?</a></p>



<h2 class="wp-block-heading" id="h2-1">What is XT Futures One-Click Reverse?</h2>



<p>The XT Futures One-Click Reverse feature allows users to quickly close their current positions at the best market price during a market reversal and simultaneously open a reverse position with the same leverage, same contract, and same quantity. This allows a smooth transition between long and short positions.</p>



<ol class="wp-block-list">
<li>The user’s current position will first be closed at the market price, and a reverse position of the same quantity will be opened at the market price. If the funds are insufficient to open a position of the same quantity, the reverse position cannot be opened. Due to factors like margin and market conditions, the reverse operation is not guaranteed to be 100% successful.</li>



<li>The One-Click Reverse feature supports both perpetual and delivery futures contracts.</li>



<li>Pending orders during reversal: If there are any pending orders associated with the current position, these will be canceled before the position is closed at market price, and then the entire position will be closed.</li>
</ol>



<h2 class="wp-block-heading" id="h2-2">How to Use One-Click Reverse on the Web?</h2>



<p>On the XT Futures page, go to&nbsp;<strong>Current Position</strong>, find the contract order you want to operate, and click the&nbsp;<strong>Reverse</strong>button to perform the action.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/38875905494041" alt=""></figure>



<h2 class="wp-block-heading" id="h2-3">How to Use One-Click Reverse on the App?</h2>



<p>On the XT Futures page, go to&nbsp;<strong>Position</strong>, find the contract order you want to operate, and click the&nbsp;<strong>Reverse</strong>&nbsp;button to perform the action.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/38875899620377" alt=""></figure>



<h3 class="wp-block-heading" id="h_01JD8TQTW7HK07C48S5W65QGT4"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


The Reverse Position Feature in Futures


<p>Are you wondering how to accurately predict Bitcoin’s price movements? Are you looking for a way to get an edge on the crypto market and capitalize on your investment strategies? Cryptocurrency technical analysis can help you do just that, giving you insight into short-term trends and insights that could be invaluable in timing and preventing losses. </p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569796503961" alt="TA-cover.jpeg"></figure>



<p>In this article, we’ll discuss what cryptocurrency technical analysis is, how it works and how to do technical analysis when trading with Bitcoin. Whether you’re a beginner trader or savvy investor, learning about technical indicators can give you the knowledge needed to take control of your portfolio.</p>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What is technical analysis?</a></p>



<p><a href="#h2-2">Three basic assumptions behind technical analysis</a></p>



<p><a href="#h2-3">Charts and support/resistance levels for crypto assets</a></p>



<p><a href="#h2-4">Technical indicators for crypto assets</a></p>



<p><a href="#h2-5">Today’s Bitcoin technical analysis</a></p>



<p><a href="#h2-6">Limitations of technical analysis</a></p>



<h2 class="wp-block-heading" id="h2-1">What is technical analysis?</h2>



<p>Cryptocurrency, like any other market asset, is influenced by external factors that can lead to fluctuating prices. To help traders make informed decisions, technical analysis is a tool that is used to predict price movements. Technical analysis is the study of past market trends to identify patterns and signals that could suggest the future direction of an asset’s price. Cryptocurrency technical analysis involves analyzing market charts and applying various technical indicators to better understand market trends and predict future behavior. By using technical analysis effectively, traders can minimize their risks and make more informed decisions that lead to profitable investments in the&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency market</a>.</p>



<h2 class="wp-block-heading" id="h2-2">Three basic assumptions behind technical analysis</h2>



<p>Technical analysis is an approach to studying market behavior that is built around three fundamental assumptions.</p>



<p>First, the market discounts everything, meaning that all information necessary to determine a cryptocurrency’s price is already reflected in the current market price. As a result, technical analysts look primarily at price and volume data, as they believe these two variables capture all available information about the market.</p>



<p>Second, prices always move in trends, meaning that markets tend to follow a pattern of moving up, down, or sideways for extended periods of time. TA experts assume that regardless of the time frame, price movements always are part of a trend. Once the trend is formulated, prices move in the same direction. Finally, history tends to repeat itself, meaning that past patterns and trends are likely to recur in the future. Market participants usually exhibit consistent reactions to market happenings over time. Even though some chart patterns formed a long time ago, they are still considered important as they could happen again.</p>



<h2 class="wp-block-heading" id="h2-3">Charts and support/resistance levels for crypto assets</h2>



<h3 class="wp-block-heading" id="h_01JD8TPK4YQE44PNDKZWBT0MX9">Line Charts</h3>



<p>Line charts are the most basic type of chart used in technical analysis. They usually use only one data point: the closing price. To identify the trend, a series of closing prices is plotted on a chart and joined to form a line.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845869593" alt="TA-line-chart.png"></figure>



<h3 class="wp-block-heading" id="h_01JD8TPK4YYZB94SSEXR2PK3HH">Candlestick Charts</h3>



<p>Candlestick charts have become an indispensable tool in the world of trading as they offer an incredible insight into the movements of crypto assets. These charts, which originated in Japan, offer a visual representation of trading that allows traders and investors to quickly understand trends and make better investment decisions. Candlestick charts display the open, high, low, and close prices of an asset, and the shape of the candlestick body and wick reveals information about the market sentiment and the overall strength of buyers and sellers.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845496473" alt="TA-candle-chart-1.png"></figure>



<p>Candlesticks are popular among cryptocurrency traders and are used in the same way as traders use them for other securities. For short-term traders, there are charting services that will provide time frames from intervals of as little as one-minute charts and various intervals up to daily charts. For the longer-term trader, daily, weekly and monthly charts are useful.</p>



<p>Each candle has two parts: the body, and the shadows or “wicks”. The body indicates the difference between the opening and closing price of the crypto coin in a time interval. The top wick shows a cryptocurrency’s highest price during a time interval. The bottom wick reveals the lowest price of the crypto asset in a time interval.</p>



<p>A long wick at the top of a candle’s body can, for example, suggest traders are taking profits and a sell-off may be occurring soon. On the contrary, a long wick at the bottom could mean traders are buying the asset every time the price drops.</p>



<p>Similarly, a candlestick in which the body occupies almost all of the space and has very short wicks, may mean that there’s strong bullish sentiment if it’s green or strong bearish sentiment if it’s red. On the other hand, a candlestick with almost no body and long wicks signals that neither buyers nor sellers are in control.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569796083609" alt="TA-candle-chart.png"></figure>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZP8QTW9GAG5VZT0PA">Support and Resistance Levels</h3>



<p>Support and resistance levels are important levels recognizable on a chart, where supply and demand meet. Learning to recognize these levels can help the trader with successful entries and exits.</p>



<p>Support levels: If the level of demand matches supply for a crypto asset or other security, it stabilizes price and creates a support level. Traders test this level multiple times before entering long trades. But, if the support level breaks after multiple tests, the prices will move lower until a new support level is determined. Then, prior support becomes the new resistance level, making or breaking trading opportunities.</p>



<p>Resistance levels: When supply meets demand, resistance levels are formed. During uptrends, prices escalate until demand can no longer exceed supply, causing more traders to sell and creating a ceiling on prices. Often, these levels are tested multiple times, and successful tests indicate traders’ comfort in shorting the security. On occasion, prices break resistance and continue to rise until they reach a new level of resistance. Typically, the old resistance level becomes the new support level just like in the case of support.</p>



<h2 class="wp-block-heading" id="h2-4">Technical indicators for crypto assets</h2>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZV05DSS2VAS39GQY7">Trend lines</h3>



<p>By studying trend lines, investors can gain valuable insight into the direction of a particular asset’s price movements. Upward trends indicate that demand for the asset is growing, potentially leading to higher prices. Conversely, downward trends suggest a decrease in demand, which could signify a good time to sell. Consolidation trends, on the other hand, point to a period of stability where the asset’s value is neither rising nor falling sharply.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4Z3XCXNRS7CJXB38Q3">Moving average</h3>



<p>Moving averages calculate the average price of a digital asset over a specific timeframe, such as the last 50 or 200 days. By comparing the current price to the moving average, analysts can determine whether a cryptocurrency is overbought or oversold, indicating a potential buying or selling opportunity. This can be especially useful in volatile markets, where quick decisions are crucial.</p>



<p>The most commonly used moving averages are used for 10, 20, 50, 100, or even 200-day periods. These make market trends more visible, with a 200-day moving average being considered a support level during an uptrend, and a resistance level during a downtrend.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZT26E9XDZ2G0HT0YA">Moving average convergence divergence (MACD)</h3>



<p>The Moving Average Convergence-Divergence (MACD) Indicator is a popular technical analysis tool that traders use to identify potential trend reversals and buy-sell signals in different securities. It consists of two lines, the MACD line, and the Signal line, both of which are derived from exponential moving averages (EMA) of different periods. When the MACD line crosses above the Signal line, it generates a bullish signal, while a crossover below the Signal line is considered bearish. The distance between the two lines also indicates the strength of the trend at any given point in time. The MACD Indicator is a versatile tool that can be customized to suit different trading styles and time frames.</p>



<p>By showing the relation between two moving averages of an asset’s price, it reflects the momentum of trends. MACD has three main components, i.e.</p>



<ul class="wp-block-list">
<li>MACD = 12-period EMA – 26-period EMA</li>



<li>Signal Line = A 9-period EMA of the MACD.</li>



<li>MACD Histogram = MACD – Signal Line</li>
</ul>



<p>Note EMA – Exponential Moving Average i.e. a moving average type that prioritizes the most recent data points.</p>



<p>MACD is dependent on moving averages i.e. past prices which means the indicator is lagging. However, given its strong fundamentals, the accuracy of the MACD indicator is high and reliable.</p>



<p>General interpretations of the MACD indicator are as follows:</p>



<ul class="wp-block-list">
<li>Positive MACD = Increasing momentum of an uptrend (price rise),</li>



<li>Negative MACD = Increasing momentum of a downtrend (price fall),</li>



<li>If the MACD increases and crosses above the Signal Line, it is a bullish crossover,</li>



<li>If the MACD falls below the Signal Line, it is a bearish crossover.</li>
</ul>



<p>By coupling trend and momentum, MACD has evolved into a popular, yet reliable trading indicator. Also, it provides enough flexibility because MACD can be applied to price charts of different time frames.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZZ0ZSK43EAVTG760C">On-balance volume indicator (OBV)</h3>



<p>On-Balance Volume, or OBV for short, is a popular technical analysis tool used to track the flow of volume in the cryptocurrency market. This indicator is based on the idea that when volume increases, prices are likely to follow suit, and that when volume decreases, prices may decrease as well. Essentially, the OBV helps traders identify trends and price movements by analyzing the total volume of buy and sell orders. When the volume on up days outpaces volume on down days, the OBV rises. When the volume on down days outpaces the volume on up days, the OBV falls. By providing a clearer picture of supply and demand, the OBV can be an essential tool for traders looking to make informed buying and selling decisions in the highly volatile crypto market.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4Z0CGSGCB45PSVGJ3G">Relative Strength Index (RSI)</h3>



<p>The Relative Strength Index, or RSI, is a popular technical analysis tool used by traders and investors to measure whether a security, such as a stock or cryptocurrency, is overbought or oversold. The RSI formula calculates the strength of price movements over a set period of time, typically 14 days, and provides a reading between 0 and 100. A reading above 70 is generally considered overbought, indicating that the security may be due for a price correction, while a reading below 30 is considered oversold, indicating that the security may be undervalued.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZXCJ5PW1SXYEJSDXY">Bollinger bands</h3>



<p>Bollinger bands are represented on a chart by a moving average line and two outer bands that are calculated from the standard deviation of price movements. As the price of the cryptocurrency fluctuates, the Bollinger Bands will adjust accordingly and provide valuable insights into potential buying and selling opportunities. The bands that often will encompass price expand and contract as volatility expands, and decreases are based on +2 standard deviations above the center line and -2 standard deviations below the center line.</p>



<p>The interpretation of price action depends on the trading environment. In bullish conditions, it is often more profitable to trade in the direction of a price breakout. In bearish markets, short in the direction of the breakout. The idea behind Bollinger Bands is that prices eventually will return to the mean. Periods of high volatility eventually will become periods of low volatility</p>



<h2 class="wp-block-heading" id="h2-5">Today’s Bitcoin technical analysis</h2>



<p>Funding rates remain positive in crypto markets</p>



<p><a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Bitcoin perpetual futures</a>&nbsp;funding rates remain positive, a sign that sentiment in the market remains positive for the moment.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845126681" alt="TA-bitcoin.png"></figure>



<p><a href="https://www.xt.com/en/futures/information/fund-rate" target="_blank" rel="noopener">Perpetual funding rates</a>&nbsp;represent payments within the futures markets between participants who are long or short the asset. When funding rates are positive, holders of long positions pay a fee to holders of short positions. When funding rates are negative, the opposite is the case.</p>



<p>The interpretation is that funding rates can often indicate bullish or bearish sentiment, with the former represented by positive rates, and the latter represented by negative ones.</p>



<p>For bitcoin funding rates have been positive in 8 of the most recent 10 trading days. Ether by comparison has shown positive funding rates in 7 of the most recent days, declining to zero 3 times, but not falling below zero since April 6.</p>



<p>Data from Cointelegraph Markets Pro and TradingView showed&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">BTC/USD</a>&nbsp;reaching $27,666 on Bitstamp.</p>



<p>Bitcoin on Bitstamp held strength on hourly timeframes after a weekly close just below the $27,000 mark.</p>



<p>With United States equities in a tight range on the day, crypto analysts looked for cues over where markets might go next.</p>



<p>For Michaël van de Poppe, founder and CEO of trading firm Eight, the outlook was good.</p>



<p>“Bitcoin breaks upwards and tests $27,600. Good signs,” he summarized.</p>



<p>“Weekly timeframe; Holding 200 MA and EMA. I think we’re continuing towards $38,000-42,000 from here.”</p>



<p>Van de Poppe referenced the 200-week moving average and exponential moving average, these seeing a retest late last week after functioning as support for two months.</p>



<p>XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of bitcoin trading such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">bitcoin spot trading</a>&nbsp;(<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT</a>),&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">bitcoin margin trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc3l_usdt" target="_blank" rel="noopener">bitcoin ETF trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">bitcoin futures trading</a>&nbsp;including&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">bitcoin perpetual contracts</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">bitcoin quarterly contracts</a>, and&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">bitcoin futures grid trading</a>.</p>



<h2 class="wp-block-heading" id="h2-6">Limitations of technical analysis</h2>



<p>As with any type of financial analysis, technical analysis for cryptocurrency has its limitations. While it can be a useful tool for predicting price movements and identifying trends, it is important to remember that this method relies solely on historical price data. This means that unforeseen events, such as major news events or changes in regulations, can cause sudden and dramatic shifts in the market that may not have been predicted by technical analysis alone. Additionally, the cryptocurrency market is still relatively new and rapidly evolving, which can make it difficult to accurately apply traditional technical analysis methods. As such, it is important for traders to keep these limitations in mind and to not rely exclusively on technical analysis when making investment decisions.</p>



<h3 class="wp-block-heading" id="h_01JD8TQTW7HK07C48S5W65QGT4"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is Cryptocurrency Technical Analysis and How to Do Technical Analysis for Bitcoin Price

Bitcoin Futures Trading: A Comprehensive Guide


<p>Are you an investor looking to take your cryptocurrency investments to the next level and make smart decisions when it comes to trading digital assets? If so, then cryptocurrency fundamental analysis is for you. </p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/17464088253465" alt="fundamental-analysis-en.jpg"></figure>



<p>By understanding how different forces drive the price of cryptocurrencies and taking a long-term view, investors can use fundamental analysis principles to assess if currencies are strong investment opportunities. </p>



<p>In article, we’ll explore what exactly constitutes fundamental analysis in the cryptocurrency market and explain step-by-step how to perform your own crypto fundamentals research. Read on as we unlock valuable insights that could potentially help shape your overall portfolio strategy!</p>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What is fundamental analysis?</a></p>



<p><a href="#h2-2">Why is fundamental analysis important?</a></p>



<p><a href="#h2-3">How to analyze a cryptocurrency using fundamental analysis?</a></p>



<p><a href="#h2-4">What are the advantages and disadvantages of crypto fundamental analysis?</a></p>



<p><a href="#h2-5">What are the differences between fundamental analysis and technical analysis?</a></p>



<p><a href="#h2-6">Bitcoin fundamental analysis</a></p>



<h2 class="wp-block-heading" id="h2-1">What is fundamental analysis?</h2>



<p>Crypto fundamental analysis is a complex term in the world of&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency</a>. It refers to the process of evaluating a cryptocurrency’s intrinsic value by analyzing its underlying technology, team, market competition, and overall health. This analysis involves a combination of qualitative and quantitative factors, such as examining the cryptocurrency’s white paper, user adoption rates, transaction volume, and development progress. The goal of conducting a crypto fundamental analysis is to identify undervalued or overvalued cryptocurrencies, as well as to build long-term investment strategies. It’s essential to have a strong understanding of this analysis if you’re looking to invest in&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrencies</a>&nbsp;because it can help you make better-informed decisions, and potentially earn significant returns.</p>



<h2 class="wp-block-heading" id="h2-2">Why is fundamental analysis important?</h2>



<p>Crypto fundamental analysis is crucial to any investor looking to maximize returns in the&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency market</a>. Without proper understanding of the fundamentals, investors are essentially throwing darts in the dark. Understanding key factors such as the technology behind the coin, the development team, market competition, and adoption rate are all essential for making informed investment decisions. Not only does fundamental analysis help investors identify potential opportunities, it also assists in risk management by highlighting potential red flags. By analyzing the fundamental factors of a cryptocurrency, investors can gain an edge in the market and ultimately make more profitable investments. If you’re serious about investing in crypto, don’t overlook the importance of fundamental analysis.</p>



<h2 class="wp-block-heading" id="h2-3">How to analyze a cryptocurrency using fundamental analysis?</h2>



<p>1. Read the white paper: A white paper is a document outlining a&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency</a>&nbsp;project’s goals, problems that the project aims to solve and the technical details of the project. Therefore, reading the white paper is essential to understand the cryptocurrency’s value proposition. The white paper will also help you understand the technical details of the project.</p>



<p>The white paper should clearly define the goals of the project, how their technology will achieve those goals, and how the cryptocurrency will function. Most white papers define a problem that is being solved with the advent of the currency itself, and this problem and solution should be crystal clear to investors.</p>



<p>A red flag on any crypto project would be a white paper full of generic promises with no details.</p>



<p>2. Assess the claims of the white paper: After reading the white paper, it’s essential to evaluate the cryptocurrency’s value proposition. You need to assess whether the cryptocurrency creates value, how it solves real problems and how it is different from other cryptocurrencies in the market. Assessing these claims will help you determine the project’s viability and potential success.</p>



<p>3. Look at competitors: Understanding the cryptocurrency’s competition is essential in determining its potential success. Analyze the cryptocurrency’s competitors and their market position. By doing so, you’ll identify whether the cryptocurrency can differentiate itself and gain market share.</p>



<p>4. Look at the team behind the project: The team behind a&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency</a>&nbsp;project is crucial to the success of the project. Analyze the team’s experience in the relevant fields, their previous projects, and their reputation in the cryptocurrency community. A competent and reputable team is more likely to deliver a successful project.</p>



<p>This may include reviewing the LinkedIn profile to learn about the professional background of any of the technical or leadership staff, as well as learning about the previous projects that the team members have launched. Also, the “About” page on any cryptocurrency’s website should clearly articulate who is helping build the project and what their expertise entails.</p>



<p>A red flag would be a team of anonymous founders or developers who don’t reveal their identity publicly, or an inexperienced team that has not built or scaled any projects in the past. An exception to this rule would be Bitcoin’s anonymous founder, Satoshi Nakamoto.</p>



<p>5. Look at on-chain metrics: On-chain metrics are data that are readily available from a blockchain. These metrics may include the number of daily transactions, the number of active addresses, and the token’s distribution. Analyzing these metrics will give you a sense of the cryptocurrency’s adoption and its potential for growth.</p>



<p>6. Look at the tokenomics: A cryptocurrency’s tokenomics include factors like supply, circulation, and token usage. Understanding the tokenomics will help you determine the token’s demand, scarcity, and potential value.</p>



<p>Here are three important data points to review before investing in any cryptocurrency:</p>



<ul class="wp-block-list">
<li>Circulating supply. This is the supply of a cryptocurrency that is currently in the market, and what current prices are based on.</li>



<li>Total supply. This is the total supply of a given cryptocurrency after all tokens are unlocked and distributed.</li>



<li>Maximum supply. Many cryptocurrencies allow the minting of new tokens, and the maximum supply is the maximum amount of tokens that will ever be minted.</li>
</ul>



<p>All three of these statistics can greatly affect the price of a given cryptocurrency, so understanding supply is very important for cryptocurrency investors.</p>



<p>7. Market cap, trading volume, and liquidity: Market cap, trading volume, and liquidity are essential factors in determining a cryptocurrency’s growth and adoption. Analyze the market cap, trading volume and liquidity to determine whether investors have confidence in the cryptocurrency’s viability.</p>



<p>8. Community: A cryptocurrency project’s community is an indicator of the project’s success. Analyze the cryptocurrency’s community by looking at social media groups, forums and other online channels. A strong and active community can help drive adoption and growth.</p>



<p>Joining the community Discord or Telegram channel can help you learn more about the community of a given cryptocurrency, as well as get your questions answered about the project itself. If there is a large community base that is well-organized and frequently promotes the project, this could be a sign of a growing cryptocurrency. If there is sparse engagement and no substantive discussion on any community platforms, this is a red flag.</p>



<p>9. Marketing: Understanding the cryptocurrency’s marketing strategy is another essential factor in determining its success. Analyze the cryptocurrency’s website, social media accounts, and any other marketing materials to understand how it intends to promote itself.</p>



<p>10. If the core product is available, test it out: Finally, if the cryptocurrency’s core product is available, test it out to evaluate its usability and potential for adoption. Testing the core product will give you a better understanding of the project’s practical use case.</p>



<h2 class="wp-block-heading" id="h2-4">What are the advantages and disadvantages of crypto fundamental analysis?</h2>



<p>Crypto fundamental analysis can be incredibly valuable for investors looking to make informed decisions about their investments. For example, by understanding the underlying technology of a particular&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency</a>, investors can assess its long-term potential and expected value. It allows investors to collect and analyze information external to the internal reality of the&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">crypto markets</a>. This allows the investor to have a clearer vision of the reality of the market. Since the new information will let you know how the values ​​react to different events. It offers a more comprehensive understanding of the value of an asset. In this way, investors can more accurately extrapolate the future value of said asset. This offers certainty when making an investment. It allows greater freedom of action compared to technical analysis. This is because fundamental analysis leads us to make decisions in the medium and long term. In comparison, technical analyzes lead us to act more repeatedly in the markets in order to adjust our decisions to the information provided by this type of analysis.</p>



<p>However, it’s not without its drawbacks. With the constantly changing landscape of the&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">crypto market</a>, predicting future trends and investments can be difficult, and market sentiment can shift quickly. Additionally, not all information about a particular&nbsp;<a href="https://www.xt.com/en/market" target="_blank" rel="noopener">cryptocurrency</a>&nbsp;is publicly available, which can limit the effectiveness of fundamental analysis. The need for extensive knowledge and experience to carry out a good analysis. For a good fundamental analysis, it is necessary to have knowledge in accounting, business and more specifically in the sector in question where the asset of our interest is located. This knowledge must also be accompanied by experience. This will finally be the one that will allow us to make better decisions according to the information analyzed. Simply put, applying fundamental analysis is more complex than technical analysis. While fundamental analysis offers a much broader view of markets, it can be outweighed by chance factors.</p>



<h2 class="wp-block-heading" id="h2-5">What are the differences between fundamental analysis and technical analysis?</h2>



<p>Fundamental analysis involves examining the underlying factors that drive the cryptocurrency’s value, such as its development team, adoption rate, and market share. On the other hand, technical analysis focuses on studying price charts and patterns to identify potential buying and selling opportunities. While both methods can be useful for predicting market trends, they require different skill sets and approaches. Fundamental analysis requires a deep understanding of the technology and industry, while technical analysis requires a sharp eye for pattern recognition and chart analysis. Ultimately, the best approach depends on individual preferences, risk tolerance, and investment goals.</p>



<h2 class="wp-block-heading" id="h2-6">Bitcoin fundamental analysis</h2>



<p>Bitcoin is a decentralized digital currency that operates without a central bank or administrator. It was invented by an unknown person or group of people using the name Satoshi Nakamoto and released as open-source software in 2009.</p>



<p>Fundamental analysis for Bitcoin involves evaluating its underlying factors, such as market demand, adoption, and technological advancements. Here are some key factors to consider when conducting a fundamental analysis of Bitcoin:</p>



<ul class="wp-block-list">
<li>Market demand: Bitcoin’s value is driven by market demand, which can be influenced by factors such as media coverage, government regulations, and adoption by merchants and consumers. Tracking metrics such as transaction volume, trading volume, and user adoption can provide insight into market demand.</li>



<li>Network effects: Bitcoin’s value is also driven by network effects, which refer to the increasing value of a network as more people use it. Bitcoin’s network effects can be measured by tracking the number of users, merchants, and exchanges that accept Bitcoin.</li>



<li>Technological advancements: Bitcoin’s underlying technology, blockchain, is constantly evolving. Technological advancements such as the Lightning Network, SegWit, and Taproot can improve the speed, security, and scalability of Bitcoin transactions.</li>



<li>Competition: Bitcoin faces competition from other cryptocurrencies, such as Ethereum, Litecoin, and Bitcoin Cash. Tracking the market share and adoption of these cryptocurrencies can provide insight into Bitcoin’s position in the market.</li>



<li>Institutional adoption: The adoption of Bitcoin by institutions, such as banks, hedge funds, and corporations, can have a significant impact on its value. Tracking institutional adoption through metrics such as investment inflows and regulatory developments can provide insight into this factor.</li>
</ul>



<p>Overall, conducting a fundamental analysis of Bitcoin requires evaluating a wide range of factors that can influence its value. It is important to consider both short-term and long-term factors and to stay up-to-date with the latest developments in the cryptocurrency industry.</p>



<p>XT&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of bitcoin trading such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">bitcoin spot trading</a>&nbsp;(<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT</a>),&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noreferrer noopener">bitcoin margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">bitcoin futures trading</a>&nbsp;including bitcoin perpetual contracts (<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT perpetual</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd" target="_blank" rel="noopener">BTC/USD perpetual</a>), bitcoin quarterly contracts (<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">BTC/USDT quarterly</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter" target="_blank" rel="noopener">BTC/USD quarterly</a>), and&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt" target="_blank" rel="noopener">bitcoin futures grid trading</a>.</p>



<h3 class="wp-block-heading" id="h_01J6ABF4DHB2FJ2TEMV5W461AF">About XT.COM</h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is Cryptocurrency Fundamental Analysis and How to Do Fundamental Analysis for Cryptocurrency


<p>As the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">cryptocurrency derivatives</a>&nbsp;market grows and evolves, traders need strategies to capitalize on pricing inefficiencies while mitigating risk. </p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16746555668633" alt="trading-strategies-cover.png"></figure>



<p>Expanding your derivatives trading toolkit is critical for achieving success in this volatile market – but it’s not easy sorting through the myriad of options and complex products available to characterize which strategies are suitable for you. </p>



<p>In this article, we will provide a comprehensive overview of the most effective trading strategies and methods that can be employed when navigating the treacherous waters of crypto derivatives products like futures, swaps, and options. </p>



<p>From understanding technical analysis to implementing money management approaches such as buying vertical spreads or using hedging techniques, our goal here is to equip traders with everything they need to know about creating sound strategies tailored specifically for their own goals.</p>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What is crypto derivatives trading?</a></p>



<p><a href="#h2-2">Types of derivatives in crypto</a></p>



<p><a href="#h2-3">5 trading tips for crypto futures trading</a></p>



<p><a href="#h2-4">Crypto futures trading strategies</a></p>



<h2 class="wp-block-heading" id="h2-1">What is crypto derivatives trading?</h2>



<p><a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">Crypto derivatives trading</a>&nbsp;is a relatively new type of financial instrument that provides investors with the ability to speculate on the price movements of crypto assets. A crypto derivative is a financial contract with values that are based upon underlying crypto assets, such as digital currencies. Compared to other forms of crypto trading,&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives trading</a>&nbsp;offers investors greater leverage and allows them to benefit from larger moves in cryptocurrency prices without having to actually own the asset they are speculating on.</p>



<p>This innovative form of trading provides an unparalleled opportunity for seasoned traders and newcomers alike to actively participate in the rapidly evolving world of digital currency. By engaging with crypto futures, options and perpetual contracts, traders can maximize their potential returns while minimizing potential losses. Moreover,&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives trading</a>&nbsp;enables market participants to develop a diversified portfolio and effectively manage risk in fluctuating market conditions. Although crypto derivatives do carry higher risks due to their active volatility, they can provide an attractive avenue for sophisticated traders looking to tap into the dynamic crypto market.</p>



<h2 class="wp-block-heading" id="h2-2">Types of derivatives in crypto</h2>



<p><strong>Crypto Futures:</strong>&nbsp;A crypto future is a contract between two parties where one party agrees to deliver the asset at some predetermined point in the future at a fixed price. The other party agrees to buy it at that price regardless if the market moves up or down. This allows traders to speculate on the price without having to own physical tokens. Trading crypto futures gives traders access to higher leverage, allowing them to increase their potential profits while also increasing their risk exposure.&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">Crypto futures</a>&nbsp;are ideal for those who are looking to use leverage and have an opinion on where they think the market will go.</p>



<p><strong>Crypto Options:</strong>&nbsp;Crypto options are similar to stock option contracts, but instead of stocks they give holders the right (but not obligation) to buy or sell a certain amount of digital currency at a predetermined price by an expiration date. Options give traders more flexibility than futures because they can choose when and how much to trade when exercising their option. This makes them ideal for hedging against potential losses as well as gaining additional exposure when speculating on the direction of the market.</p>



<p><strong>Perpetual Contracts:</strong>&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Perpetual contracts</a>&nbsp;are similar to futures but do not have an expiry date or settlement date like traditional futures do, thus enabling perpetual trading opportunities. They allow traders to speculate on prices without having ownership over any underlying assets or tokens and provide access to larger amounts of leverage than&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">spot exchanges</a>&nbsp;do. Perpetual contracts are often used by experienced crypto traders who want quick entry and exit points with less risk compared with traditional&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">spot trading</a>&nbsp;methods.</p>



<h2 class="wp-block-heading" id="h2-3">5 trading tips for crypto futures trading</h2>



<h3 class="wp-block-heading" id="h_01JD8Z9VVBZRPPTXYNG4WJV0DC">1. Find a Trading Methodology</h3>



<p>Finding a trading methodology is more than just replicating a highly profitable strategy that was found on YouTube or social media. You can craft a personalized game plan by delving into your psychology, balancing your lifestyle, taming your risk appetite, and envisioning your long-term goals. You can also unleash your inner trading genius by harnessing techniques like technical analysis, trend-based strategies, and growth investing.</p>



<p>To find the optimal fit for yourself, follow these points:</p>



<ul class="wp-block-list">
<li>Identify your trader personality</li>



<li>Determine your risk tolerance and long-term financial goals</li>



<li>Define trade parameters that could match your personality</li>



<li>Evaluate the performance of each parameter and how you deal with them</li>



<li>Make adjustments if you experience problems</li>
</ul>



<h3 class="wp-block-heading" id="h_01JD8Z9VVBTQWCS91WB643689S">2. Develop a Trading Plan</h3>



<p>A trading plan can help you to mitigate the risks of liquidation and help improve trading consistency. When developing a trading plan, you must include a detailed layout of how you would enter and exit positions, including entry and exit indicators, position-sizing, and stop-loss placements.</p>



<p>A well-crafted trading strategy not only takes the stress out of your trading day but also helps seize those elusive opportunities. Level up your awareness and transform your trading habits into a more calculated and rewarding endeavor.</p>



<p>Your trading plan should include a detailed layout of the following:</p>



<ul class="wp-block-list">
<li>Exit and entry signal</li>



<li>Risk to reward ratio</li>



<li>Average expected return</li>



<li>Maximum expected drawdown</li>



<li>Position resizing parameter</li>



<li>Profit-taking signals</li>
</ul>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCZXSPWQ78JKNNZBKN">3. Proper Risk Management</h3>



<p>Embark on your trading journey by defining the thresholds for gains and losses in each transaction. Adopt a long-term outlook and formulate a robust strategy to conquer the market, bit by bit. Leverage risk management tactics to safeguard your capital, maintain pragmatic expectations, and prevent your emotions from hijacking your trade decisions.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCGHRBRVHE8Z999FWM">4. Trade Responsibly</h3>



<p>Avoid the pitfalls of emotional and impulsive trading by adopting strategies designed to protect both your mindset and your financial success. Maintain a disciplined approach by limiting your use of leverage and opting for a smaller number of well-researched trades over a set timeframe. Set modest goals and stay realistic with your financial targets. Remember, a solid foundation in futures trading means only using funds you’re prepared to lose and steering clear of get-rich-quick illusions. By practicing responsible decision-making, you can sidestep potential disasters and ensure a sustainable trading career.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVC6K91D45GKNPDCQZJ">5. Continuous Education</h3>



<p>Discover the dynamic world of cryptocurrencies as they redefine asset classes and captivate enthusiasts on a daily basis. With continuous advancements and an ever-evolving landscape, the blockchain industry demands constant attention to remain ahead of the game. By investing in your knowledge and honing your trading skills, you’ll gain precise insights into market trends and pave your path to success. Stay ahead and be prepared for the exciting future of digital currencies.</p>



<h2 class="wp-block-heading" id="h2-4">Crypto futures trading strategies</h2>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCN681Z2S2RR3ATRA0">Pullback strategy</h3>



<p>The pullback strategy approach is designed to help traders capitalize on market movements by pinpointing opportunities after a price surge or decline in a given crypto asset, such as Bitcoin or Ethereum. The central idea revolves around identifying brief periods of retracement or “pullback” that occur after significant price shifts. By anticipating these pullbacks, traders can make informed decisions on when to enter or exit their futures contracts, maximizing the potential for profits while minimizing risks. In essence, the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures</a>&nbsp;pullback strategy empowers traders with the ability to drive returns by leveraging short-term market setbacks and riding on the subsequent recovery.</p>



<p>During an uptrend, as shown in the graphic below, the dominant trend waves moved higher. The correction waves represent moves against the ongoing trend direction. When trading pullbacks, traders look for those correction phases and then time trade entries during such phases.</p>



<p>The idea is that you want to wait for the price to “pull back” during a trend to provide you with a better entry price. When the market is moving higher and you anticipate that the move will continue, you want to enter a trade for the lowest price possible. Pullbacks help you find such opportunities.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16746513495833" alt="pullback.png"></figure>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCKZCR8P5J78TAMT1H">Going long or short</h3>



<p>Going long means purchasing a&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures contract</a>&nbsp;with the expectation that the price of the underlying cryptocurrency will increase, thus potentially generating substantial returns. Conversely, going short involves selling a futures contract in hopes that the price will decrease, allowing the trader to buy it back at a lower cost and make a profit. This captivating aspect of crypto futures trading allows for traders with opposite market outlooks to engage in profitable transactions, fostering price discovery and making the market more accessible for diverse investment strategies. Whether you choose to go long or short, it is pertinent to have a strong understanding of the market dynamics and manage your risk effectively to maximize your potential in this exciting realm of the cryptocurrency market.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVC5P7DV95T138DW9H8">Breakout trading</h3>



<p>The breakout trading approach operates on the principle that once a specific price level is breached, the momentum in the market is likely to continue in the same direction, thereby providing ample opportunities for traders to seize substantial returns. Crypto futures breakout traders participate in this innovative financial ecosystem by closely monitoring resistance and support levels of a particular digital asset, and then meticulously entering or exiting their trades depending on the price movement. Since cryptocurrencies are renowned for their volatility, this trading strategy attracts enthusiasts who thrive on high-octane market conditions and can make informed decisions under pressure, skillfully navigating the world of decentralized digital currencies.</p>



<p>Breakout trading purposes of catching the market volatility when the price is breaking out of support and resistance levels, trendlines, and other technical levels. Breakouts often happen in the market, and you can easily spot them by using different indicators and trendlines. And it gets accompanied by an increase in the volume of buys or sales in the market. Also, after a breakout happens, the market experiences great volatility. This happens due to executions of numerous pending orders.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVC2WPMCT7N2MNXG4ES">Spread trading</h3>



<p>Spread trading involves capitalizing on the difference in price between two similar positions, often within the same asset class, to create a low-risk profit opportunity. For instance, a trader may opt to simultaneously open a long position on Bitcoin for February and a short position for March, taking advantage of the price fluctuations in both months to secure gains. This strategic approach to crypto futures allows for flexibility and adaptation to market volatility and often proves to be a lucrative venture for many shrewd traders. By engaging in&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures</a>&nbsp;spread trading, one can harness the rapid momentum and booming potential of cryptocurrencies while mitigating risks associated with price swings and market unpredictability. It is important, however, for those interested in crypto futures spread trading to carefully research the market and understand the inherent risks associated with such investments, as this knowledge will ultimately determine their success in navigating this dynamic financial landscape.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCSKXW4Z69KEE70V8Z">Trading the range</h3>



<p>the concept of “trading the range” refers to a strategic method where traders capitalize on the fluctuating prices of cryptocurrencies within a specific boundary or range. By observing the historical price data and identifying recurring support and resistance levels, traders can make calculated decisions to buy or sell their crypto assets accordingly. This technique not only allows them to maximize potential profits but also minimize potential losses involved in the inherently volatile cryptocurrency market. When trading in the range, the first thing you need to care about is whether the market is actually trading in a range or sideways. If there is an absence of higher highs or lower lows in the price, then the current market environment would be a ranging market typically.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCF43BQ6TRAYEXJDJQ">Counter-trend trading</h3>



<p>Counter-trend trading involves the identification of market trends and making calculated trades with the anticipation of a reversal in the direction of the trend. Traders adopting this method are like the bold contrarians who dare to swim against the tide, relying on their insight and expertise to predict impending market shifts in the highly volatile crypto market. This bold approach deviates from the conventional wisdom of “following the trend,” offering opportunities to profit from unpredictable market fluctuations. The allure of this strategy lies in the potential profits that can be made if one is successful in spotting the turning points of a crypto asset’s price trajectory. While counter-trend trading may seem risky to some, those adept at analyzing various market indicators and risk management techniques stand to reap the benefits of this daring approach in the exhilarating domain of&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures trading</a>.</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVCBSG0Z73AA8ECKD0S">Buyer And Seller Interest</h3>



<p>This strategy dives deep into analyzing the varying interests and positions of buyers and sellers in the futures market, which provides vital insights into the possible future movements of digital assets. By closely monitoring factors such as open interest, trading volume, and long/short positions, traders can meticulously predict potential price fluctuations and make informed decisions.</p>



<p>As a trader, you can use the data of buyer and seller interest to decide whether to buy or sell a futures contract. Buyer and sellers’ interest is determined by the Depth of the Market or DOM window, which shows the number of open buys and sells orders for a&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures trading</a>&nbsp;contract at a number of price levels. &nbsp;Also, DOM shows the liquidity for the underlying futures contracts. If there is a higher number of market orders at each price, then it refers to higher liquidity and vice versa. Some brokers refer to the depth of the market as the order book, which is a common thing found across all the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto futures exchanges</a>.</p>



<h2 class="wp-block-heading" id="h_01JD8Z9VVDW9B3CQD8VF49902M">Final words</h2>



<p>In conclusion, cryptocurrency derivatives trading is a high-risk yet potentially lucrative field that requires careful research and strategizing prior to entering into any transactions in order to maximize profits while minimizing losses incurred along the way. By familiarizing yourself with different types of crypto derivatives available, setting realistic goals for yourself, diversifying your portfolio where possible, utilizing stop-loss orders when needed and staying up-to-date with news related stories will all help ensure success when participating in this market segment over time!</p>



<h3 class="wp-block-heading" id="h_01JD8Z9VVEASD7361H7Z6CWG4C">About XT.COM</h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


Trading Strategies for Cryptocurrency Derivatives Trading


<p>As the cryptocurrency industry continues to expand and evolve, so does the world of derivatives trading. One of the newest offerings on this front is perpetual futures contracts – a hybrid contract featuring elements from both traditional futures and spot markets – allowing investors to speculate on long or short positions with reduced risks. </p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18209974633753" alt="perpetual-futures-contracts-cover.jpeg"></figure>



<p>But before you dive in headfirst, it’s important to have a firm understanding of how these complex products work. </p>



<p>Here we’ll explore what perpetual contracts are, their key attributes, and why they may be appealing to traders looking for leverage without expiry dates or settlement periods.</p>



<h3 class="wp-block-heading"><strong>Contents of the article:</strong></h3>



<p><a href="#h2-1">What are perpetual futures contracts?</a></p>



<p><a href="#h2-2">What are the main features of perpetual futures contracts trading?</a></p>



<p><a href="#h2-3">How do perpetual futures contracts work?</a></p>



<p><a href="#h2-4">What are the differences between perpetual futures contracts and traditional futures contracts?</a></p>



<p><a href="#h2-5">What are the differences between perpetual futures contracts and margin trading?</a></p>



<p><a href="#h2-6">How to trade futures contracts on XT.COM?</a></p>



<h2 class="wp-block-heading" id="h2-1">What are perpetual futures contracts?</h2>



<p>A futures contract is an agreement between two parties to buy or sell an asset at a predetermined price and date in the future. These assets can range from commodities such as gold or oil, to financial instruments like cryptocurrencies or stocks. This type of contract serves as a powerful tool to both protect against potential losses and to secure profits.</p>



<p><a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Perpetual futures contracts</a>&nbsp;are a type of derivative that allows traders to speculate on the future price of an underlying asset without actually owning it. Unlike regular futures contracts that have a set expiration date, perpetual futures contracts do not expire. This means that traders can hold their positions for as long as they want, allowing them to take advantage of long-term market trends and potentially earn significant profits. Additionally, perpetual futures contracts often have unique features like funding rates, which help keep their price in line with the underlying asset.</p>



<p>Perpetual futures do not have settlement periods. You can hold a trade for as long as you want, as long as you have enough margin to keep it open. For example, if you buy&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">BTC/USDT perpetual</a>&nbsp;at $30,000, you will not be bound by any contract expiry time. You can close the trade and secure your profit (or take the loss) when you want. Trading in perpetual futures is not allowed in the U.S. But the market for perpetual futures is sizable. Almost 75% of cryptocurrency trading worldwide last year was in perpetual futures.</p>



<p>Overall, perpetual futures contracts can be a useful tool for traders looking to gain exposure to the cryptocurrency markets, but they also come with significant risks and should be used with caution.</p>



<h2 class="wp-block-heading" id="h2-2">What are the main features of perpetual futures contracts trading?</h2>



<p>While&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual futures contracts</a>&nbsp;are relatively new to the trading world, they have quickly gained popularity among traders looking for a flexible and versatile way to engage in speculative trading. Whether you are a seasoned trader or just starting out, perpetual futures contracts are definitely worth learning more about.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFDANFE5TT9MPDHJM0D">Initial margin</h3>



<p>Initial margin is the minimum amount of funds required to be deposited into a trading account to open a new position. This margin is used to ensure that traders can meet their obligations if the market moves against them, and it also acts as a buffer against volatile price movements. While initial margin requirements vary between exchanges, they typically represent a fraction of the total trade value. Therefore, it is crucial to manage initial margin levels carefully to avoid liquidation or margin calls. It is also advisable to keep track of the margin requirements and regulations on different platforms to optimize your trading experience.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFDG3N7TTFHXMSZ0MPZ">Maintenance margin</h3>



<p>Maintenance margin is the minimum amount of funds that an investor must maintain in their account to keep their position open. In simple terms, it is the amount of money required to hold a position in a perpetual futures contract. This is done to protect both the exchange and the investor from potential losses. If the investor fails to meet the maintenance margin, then the&nbsp;<a href="http://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives exchange</a>&nbsp;may close their position or take other actions to ensure the remaining funds are sufficient to cover the losses.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFDXRH4RTGNQA71BST4">Liquidation</h3>



<p>Liquidation refers to the process of closing out a trader’s position when their available margin falls below a certain threshold. The purpose of liquidation is to mitigate risk and ensure that traders do not lose more than they can afford. For traders, it’s important to keep a close eye on their margin levels to avoid being liquidated. On the flip side, liquidation can present an opportunity for other traders to capitalize on a price drop by buying in at a lower price.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFDD8D1FPG3RJG8AX0H">Funding rate</h3>



<p>Funding rate is a mechanism for ensuring that the price of the perpetual futures contracts reflects the underlying price of Bitcoin. When the funding rate is positive, long positions pay shorts, while when it’s negative, shorts pay longs. Understanding funding rates is essential as it can impact an investor’s profit and loss, making it crucial to keep an eye on funding rates when trading perpetual futures (such as&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual bitcoin futures</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">perpetual ether futures</a>).</p>



<h3 class="wp-block-heading" id="h_01J69MPYFD0D2DKNTBAD6YDCAZ">Mark price</h3>



<p>Mark price refers to the fair value price of an asset, which is estimated by taking into account the bid and ask prices from different trading platforms. This price is used to prevent market manipulation by ensuring that the futures contract’s price remains in line with the underlying asset’s price. This means that if the market price of cryptocurrency changes, the mark price of the futures contracts will also adjust accordingly, which can help you make more precise trading decisions.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFD698KAPSEPB9EXEPS">PnL</h3>



<p>PnL stands for “profit and loss,” and it’s a way of measuring the potential gains or losses that traders can experience when buying and selling perpetual futures contracts (such as&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual bitcoin contracts</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">perpetual ether contracts</a>). Essentially, PnL is a calculation of the difference between the entry price and the exit price of a trade, taking into account any fees or funding costs associated with the contract.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFDN49ZQD30PPZ1TK0B">Insurance Fund</h3>



<p>Insurance fund in perpetual futures (such as&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual BTC contracts</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">perpetual ETH contracts</a>) serves as a protection pool that helps safeguard traders against potential losses due to sudden market fluctuations. In other words, if the market experiences a sudden and unexpected drop, the insurance fund acts as a buffer to help cover any losses and prevent traders from having to liquidate their positions. It’s an important safety net in what can be a volatile and unpredictable market, and is just one of the ways that trading in perpetual futures is evolving to meet the needs of its users.</p>



<h3 class="wp-block-heading" id="h_01J69MPYFD3JHQ5Y0R0TK34E08">Auto-deleveraging</h3>



<p>Auto-deleveraging is essentially a risk management mechanism that ensures that trading positions are closed in case of insufficient margin funds. In simpler terms, it means that if a trader’s position moves against them and their margin balance falls below the required maintenance, the&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives exchange</a>&nbsp;will automatically deleverage their position. While this may sound like a bad thing, it’s actually a preventative measure that protects traders from losing more funds than they can afford. It’s important for anyone trading perpetual futures (such as&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">perpetual bitcoin futures contracts</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt" target="_blank" rel="noopener">perpetual ether futures contracts</a>) to understand how auto-deleveraging can affect their positions and to use it as an opportunity to assess and improve their risk management strategies.</p>



<h2 class="wp-block-heading" id="h2-3">How do perpetual futures contracts work?</h2>



<p>Let’s take a hypothetical example to understand how perpetual futures work. Assume that a trader has some BTC. When they purchase the contract, they either want this sum to increase in line with the price of&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">BTC/USDT</a>&nbsp;or move in the opposite direction when they sell the contract. Considering that each contract is worth $1, if they purchase one contract at the price of $50.50, they must pay $1 in BTC. Instead, if they sell the contract, they get $1’s worth of BTC at the price they sold it for (it still applies if they sell before they acquire).</p>



<p>It is important to note that the trader is purchasing contracts, not BTC or dollars. So, why should you trade crypto perpetual futures? And how can it be certain that the contract’s price will follow the&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">BTC/USDT</a>&nbsp;price?</p>



<p>The answer is via a funding mechanism. Users with long positions are paid the funding rate (compensated by users with short positions) when the contract price is lower than the price of BTC, giving them an incentive to purchase contracts, causing the contract price to rise and realign with the price of&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">BTC/USDT</a>. Similarly, users with short positions can purchase contracts to close their positions, which will likely cause the price of the contract to increase to match the price of BTC.</p>



<p>In contrast to this situation, the opposite occurs when the price of the contract is higher than the price of BTC – i.e., users with long positions pay users with short positions, encouraging sellers to sell the contract, which drives its price closer to the price of BTC. The difference between the contract price and the price of BTC determines how much funding rate one will receive or pay.</p>



<h2 class="wp-block-heading" id="h2-4">What are the differences between perpetual futures contracts and traditional futures contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Perpetual futures contracts</a>&nbsp;and traditional futures contracts are two variations of futures trading that bring different advantages and risks to traders and investors. Unlike traditional futures contracts, perpetual futures contracts do not have a set expiry date, which allows traders to hold positions for as long as they want. Secondly, perpetual contracts offer greater flexibility and liquidity in terms of margin requirements and funding costs. Moreover, perpetual futures contracts use innovative mechanisms like funding rates to ensure that the futures price closely tracks the underlying asset’s spot price. However, perpetual contracts also come with unique risks, such as funding costs that can fluctuate as frequently as every 8 hours. Conversely, traditional futures contracts have a fixed expiration date and may require higher margin requirements, which can limit a trader’s flexibility and add uncertainty. Ultimately, which contract to use depends on a trader’s risk tolerance, trading goals, and market conditions.</p>



<h2 class="wp-block-heading" id="h2-5">What are the differences between perpetual futures contracts and margin trading?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Perpetual futures contracts</a>&nbsp;and&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noreferrer noopener">margin trading</a>&nbsp;are both ways for traders to increase their exposure to the cryptocurrency markets, but there are some key differences between the two.</p>



<ul class="wp-block-list">
<li>Timeframe: Perpetual futures contracts do not have an expiration date, while margin trading is typically done over a shorter timeframe, with traders borrowing funds to open a position for a specific period of time.</li>



<li>Settlement: Perpetual futures contracts settle based on the index price of the underlying cryptocurrency, while margin trading settles based on the price of the cryptocurrency at the time the position is closed.</li>



<li>Leverage: Both perpetual futures contracts and margin trading allow traders to use leverage to increase their exposure to the markets. However, perpetual futures contracts typically offer higher levels of leverage than margin trading, which can increase both potential profits and potential losses.</li>



<li>Fees: Perpetual futures contracts typically have a funding fee that is paid by traders who hold their positions open for an extended period of time. Margin trading, on the other hand, typically involves paying interest on the borrowed funds.</li>



<li>Collateral: Perpetual futures contracts require traders to deposit a certain amount of cryptocurrency as collateral to open a position, while margin trading requires traders to deposit funds as collateral.</li>
</ul>



<h2 class="wp-block-heading" id="h2-6">How to trade futures contracts on XT?</h2>



<p>At XT&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives exchange</a>, we provide&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">Bitcoin futures trading</a>&nbsp;via two flagship products:&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">Perpetual Bitcoin Futures</a>&nbsp;and&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">Quarterly Bitcoin Futures</a>. These two contracts differ based on two primary factors: Expiration and Funding Fees.</p>



<p>Trading crypto derivatives contracts on&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">XT Futures</a>&nbsp;is simple for all traders. If you’re already a user, follow these steps to get started:</p>



<ol class="wp-block-list">
<li>Open a futures trading account and enable 2FA verification to fund your futures account and start trading.</li>



<li>Deposit funds to your futures wallet, which supports various cryptocurrencies including USDT.</li>



<li>Choose between the two derivative contracts on XT Futures –&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt" target="_blank" rel="noopener">USDT Margined Futures</a>&nbsp;and&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter" target="_blank" rel="noopener">COIN Margined Futures</a>.</li>



<li>Select the right leverage amount for your position.</li>



<li>Place an order from a range of available options – buy-limit, buy-market, and more.</li>
</ol>



<p>Practice trading in real-time with zero risks. XT&nbsp;<a href="http://www.xt.com/en/futures" target="_blank" rel="noopener">crypto derivatives platform</a>&nbsp;provides a dedicated&nbsp;<a href="https://testnet.xt.com/en/futures/trade/btc_usdt" rel="nofollow noopener" target="_blank">DEMO trading</a>&nbsp;environment for users to learn and sharpen their skills. Join the world of crypto derivative contracts today and sign up for XT Futures now!</p>



<h3 class="wp-block-heading" id="h_01J69MPYFD8KP0Z1A0NX0S85HY"><strong>About XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en" target="_blank" rel="noopener">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en" target="_blank" rel="noopener">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noopener">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin" target="_blank" rel="noopener">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures" target="_blank" rel="noopener">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft" target="_blank" rel="noopener">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


Cryptocurrency Perpetual Futures Contracts Explained

Why Is Crypto Futures Trading Popular?

Gold vs. Bitcoin vs. Crude Oil: Which is the Best for Futures Trading?

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Since your transaction volume and income in XT futures have reached the threshold of becoming a trader, you are specially invited to become an XT futures trader. 

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Thank you for submitting your documents to apply to become a trader in XT.COM Copy Trading Program. Unfortunately, the documents you submitted may be incorrect, and the application failed to pass review. 

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 1. Screenshots of trading records over the past one (1) month, including derivatives futures win rate (%) 

 2. Personal social media profiles, the number of followers and relevant information on cryptocurrency community 

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 [Start here] Trading homepage interface 

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