Products whose value changes with a change in the value of a source asset derivatives is called. For example, a Bitcoin market allows investors to buy and sell Bitcoin at any time, but also imposes certain restrictions. Investors can only make money if the price of Bitcoin rises, or vice versa, when the price of Bitcoin falls, everyone who owns BTC will suffer.

On the other hand, a Bitcoin derivative is essentially any without owning bitcoincould allow people to trade contracts that track Bitcoin price. So, just like in traditional financial markets, derivatives derive their value from assets such as stocks, bonds, interest rates, commodities, currencies and cryptocurrencies.

While derivatives are often used to hedge risk, investments in these products tell investors about the price of the valuable asset. possibility to speculate also gives.

What are crypto derivatives?

There are three main types of crypto derivatives: crypto futures, crypto options, and perpetual futures.

Crypto Futuresinvolves an agreement between the buyer and seller to sell an asset in the future, and the date and amount of the transaction is predetermined. Futures crypto transactions are a type of crypto derivatives commonly used by institutional investors.

crypto optionsLike futures, it is a crypto derivative that allows an investor to buy or sell an asset at a specified price at a future date. However, as the name suggests, it gives the investor the option not to buy or sell the agreed-upon asset. This feature sets it apart from crypto futures.

Permanent Futures Trading contract or permanent exchange The difference of the crypto derivative, also known as the crypto derivative, from the others is that the contracts have no expiration date. Investors can hold contracts for as long as they want, as long as they pay a holding fee, called the financing rate.

How to trade with crypto derivatives

For investors who intend to trade crypto derivatives, the first step is to sign up with a crypto or traditional exchange such as FTX that allows crypto derivatives trading. Listed in the top 10 crypto derivative exchanges according to Coin Market Cap data, FTX is a cryptocurrency exchange where you can safely track values ​​like Bitcoin, Ethereum, Avax coin price. Here are the steps a cryptocurrency trader must follow:

1. Compare the features offered by different crypto exchanges, including margin, payment term, producer/recipient fees, and applicable withdrawal limits. Choose a crypto exchange that offers the best value for the fees it charges. For example FTX 0.02% producer fee and offers a buyer’s fee of 0.04%.
2. Open an account on a crypto exchange and fund your account with crypto transfers.
3. Focus on crypto derivatives that traders are interested in trading. Understand how margin works and choose a margin rate. New traders should initially apply a minimum margin.
4. Buy futures contracts through a marginal deposit.
5. Hold futures contracts until expiration. Close the position before expiration and make a profit or loss.

Finally, ideally, investors should develop a plan before trading crypto derivatives. Some exchanges offer lower fees for their native tokens, so it may be wise to use them for cost efficiency.

Crypto derivatives trading offers the right investor various growth perspectives. The trick is to design a strategy before starting crypto derivatives. A trader must analyze and understand the risks of trading derivatives before making the first trade