With the news of an impending spot Bitcoin ETF, bitcoin futures activity has been on the rise. If you are interested in trading derivatives or currently have skin in the game, this guide will be useful. Here are the best places to trade bitcoin futures in 2023.
What to consider when choosing a futures exchange
As you dive into trading bitcoin futures, there are a few factors that you should consider before choosing a trading platform. Perhaps the most overlooked factor in retail trading is order execution.
Simply put, good order execution is the timely and accurate fulfillment of a trade request. Your orders should execute quickly, prices should closely align with the market, and should be reliable and cost-efficient.
The most obvious factors to consider when choosing a bitcoin futures exchange are spreads and fees. When you deal with exchanges, there are fees galore. Some of these include maker/taker fees, deposit/withdrawal fees, and delivery fees.
Ideally, at the very least, the best exchanges have transparent and simple fee schedules and low fees. A thin spread typically results in lower transaction costs for traders.
When the spread is narrow, traders can buy at prices closer to the market’s current value (ask price) and sell at prices that are also closer to the market’s current value (bid price). This reduces the cost of entering and exiting positions, which is particularly important for high-frequency traders.
Of course, there are many other ancillary factors you could consider when choosing an exchange. These include margin requirements, geographical availability, perpetuals, security, customer support, trading interface, or reputation. The bottom line is you should choose the exchange that fits your needs the best.
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Where to trade bitcoin futures
1. Coinbase
Coinbase is a well-known global cryptocurrency exchange and platform that provides services for buying, selling, storing, and managing various cryptocurrencies. Founded in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase has become one of the largest and most reputable CEXs in the world.
The U.S. based broker offers Coinbase Advanced Trade, which replaces Coinbase Pro as the platform’s advanced trading option. Advanced Trade offers a range of sophisticated trading tools and features for more experienced traders, such as FDIC insured balances, up to $250,000.
Lastly, one of the standout features of Coinbase its membership program, Coinbase One,. Some of the perks include zero trading fees, 24/7 phone support, and account protection.
- Nano BTC futures contracts
- Learning resources
- Multiple order types
- Advanced trading interface
- FDIC insurance (where applicable)
- Derivatives not available to clients in the U.K.
- Perpetuals only available to non U.S. customers
2. Kraken
Kraken is a well-established cryptocurrency exchange and trading platform. Founded in 2011 and headquartered in San Francisco, California, Kraken is one of the oldest and most reputable cryptocurrency exchanges in the world.
Kraken Pro serves as the ultimate hub for experienced cryptocurrency traders. On it, you can navigate cryptocurrency markets swiftly by exploring categories such as top gainers, top losers, top traded assets, and newly listed tokens.
You can also analyze potential trades effectively with full-featured charting tools, an array of technical indicators, and the ability to compare up to four markets simultaneously. Stay up-to-date with real-time order books and live trade feeds.
Optimize your trading strategy with advanced order types and instructions, including options like stop loss, take profit, IOC (Immediate or Cancel), reduce-only, and trigger options. Modify your orders directly on the chart with ease.
- Demo/ test accounts
- Assignment of unfilled liquidations
- Multi-collateral futures
- Mobile apps for standard exchange and Kraken Pro
- Futures not available for U.K. residents
- Not insured
3. OKX
OKX (formerly known as OKEx) is a cryptocurrency exchange and trading platform that provides services for buying, selling, and trading a wide range of cryptocurrencies. It was founded in 2017 and is headquartered in Malta. Star Xu founded the OK Group, which also owns OKCoin and OKX.
OKX allows users to participate in most cryptocurrency activities. This includes trading (options, futures, spot, and margin), NFTs, cloud mining, staking, and savings programs to earn rewards or interest on select cryptocurrencies.
The exchange even has a flagship EVM-compatible blockchain (OKTC) and a DEX aggregator that minimizes slippage, gas fees, and trading fees for purchasing crypto using a DEX.
- OKX Insurance Fund
- Futures Grid trading bot
- High leverage compared to many exchanges
- Copy trading
- TradingView integration
- Not available to U.S. users
- No native support for fiat deposits
4. BYDFi
BYDFi, formerly known as BitYard, was initially established in 2019-20. Since its inception, this cryptocurrency exchange has expanded its services to cater to users in over 150 countries. The name “BYDFi” stands for “BUILD Your Dream Finance,” reflecting its commitment to empowering users to shape their financial future.
One notable feature of BYDFi is its support for Perpetual (Perp) contracts, which can be denominated in either USDT (Tether, a stablecoin) or other cryptocurrencies as margin. This flexibility allows traders to choose their preferred margin type for trading these perpetual contracts.
Furthermore, BYDFi distinguishes itself in the competitive cryptocurrency exchange landscape by offering leveraged tokens. Leveraged tokens are specialized tokens designed to track the price movements of an underlying asset with built-in leverage. This unique feature provides traders with additional options and tools for managing their cryptocurrency investments and trading strategies.
- High amount of leverage
- Available in many countries
- User friendly interface
- Initiate leveraged trades for perps
- Copy trading
- Mostly has trading products and not much else
- Limited liquidity for certain trading pairs
5. Bybit
Bybit is a cryptocurrency derivatives exchange and trading platform that provides services for trading a variety of cryptocurrency derivatives, including perpetual contracts, futures contracts, and options contracts. Bybit was founded in March 2018.
The exchange offers perpetual contracts, which are derivative contracts without an expiration date. Traders can take long (buy) or short (sell) positions on various cryptocurrencies with leverage. It also provides traditional futures contracts with fixed expiration dates.
Bybit provides a user-friendly trading interface with advanced charting tools, technical indicators, and order types to assist traders in making informed decisions. Lastly, Bybit has educational content and resources to help users understand cryptocurrency trading, risk management, and market analysis.
- Wide availability for global users
- Multiple deposit methods (crypto, card, fiat, etc.)
- Demo trading
- High leverage
- Trading bots
- Not available in the U.S.
- Max leverage only available for bitcoin
6. Binance
Binance is one of the largest and most well-known cryptocurrency exchanges in the world. Founded in 2017 by Changpeng Zhao (CZ), Binance has grown rapidly and established itself as a leading platform for trading various cryptocurrencies. It is the largest exchange by trading volume.
The global exchange has a multitude of features, including, NFTs, staking, mining, spot trading, derivatives (futures and options), margin trading, trading bots, copy trading, and so much more.
Additionally, the exchange has a flagship blockchain and cryptocurrency. Users can take advantage of discounts when they hold the exchange’s native BNB coin. The leading CEX also offers a learning academy and project launchpad.
- Deep liquidity
- Large selection of trading pairs for derivatives
- Trading bots
- Learning resources
- Affiliates program allows you to earn up to 40% on trading fes
- Limited fiat on-ramp
- Futures not available for U.S. users
Best practices for bitcoin futures trading
There are a few things that you should keep in mind after you have chosen a trading platform and before you start trading.
Education
Before diving into bitcoin futures trading, take the time to thoroughly educate yourself about the mechanics of futures contracts, the underlying market, and trading strategies. Understanding how futures work and how to master your emotions.
Your worst enemy in trading? It’s not the market. It’s the person staring back at you in the mirror. Master your emotions, master trading.
Steve Burns, founder of New Trader University
Technical analysis is also a big part of trading education. Use technical analysis tools and chart patterns to identify potential entry and exit points. Technical analysis can help you make more informed trading decisions.
Trading strategy
Develop a well-defined trading strategy and stick to it. Whether you’re a day trader, swing trader, or long-term investor, having a strategy helps you stay disciplined.
Trading is a numbers game. Inevitably, some of your trades will fail. It is best to stick with a trading strategy for some time before you move to another one. If you arbitrarily change strategies at every losing trade, you are less likely to learn from mistakes and understand what works for you. If you’re unsure about building a trading strategy and are looking for professional inspiration, choose a platform with a copy trading feature, such as Bybit.
Paper/ demo trading
Consider practicing with a paper or demo trading account before using real funds. This allows you to test your strategies without risking actual capital. In this way, you can gain confidence while developing a personal trading strategy.
Risk management
Risk management is something you must learn before trading with size. Set clear risk management rules and stick to them. Determine your risk tolerance, define stop-loss orders, and avoid risking more than you can afford to lose on a single trade. For example, you can determine that you’re willing to risk a maximum of 2% of your total capital on any single trade. Additionally, you may also find it useful to hedge your trades, which will minimize the downsides.
Risks and rewards of bitcoin futures trading
Bitcoin futures trading carries inherent risks. First and foremost, crypto markets, including bitcoin, are known for their high volatility. This means that prices can experience rapid and substantial fluctuations, leading to significant gains or losses in a short period. Additionally, the use of leverage in futures trading can magnify both profits and losses, making it possible to lose more than your initial investment. It’s important to note that traders using leverage must maintain sufficient margin to cover potential losses; failure to do so can result in margin calls and liquidation of positions.
Furthermore, crypto markets are less regulated than traditional financial markets, which can expose traders to market and price manipulation.
Spoiled for choice
Most people in crypto today were not around in the early years and are unaware of how privileged bitcoin traders are today. In the past, bitcoin futures were little more than a far-away dream!
Today, traders have a plethora of solid options with which to trade crypto futures. Consequently, exchanges and brokerages now must compete for market share. The result is a better user experience with lower fees and increased innovation.
Frequently asked questions
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