Crypto futures trading means buying or selling a contract whose value follows the price of a cryptocurrency, instead of buying the coin itself. You put up a small deposit, called margin, to open a position that is much larger than the deposit, and you can profit from a price that rises (a long) or falls (a short). That leverage cuts both ways: it enlarges losses just as it enlarges gains, and a position can be closed by force if the price moves far enough against you.
In brief
- A futures contract is an agreement to buy or sell an asset at a fixed price on a future date, and in crypto most traders use contracts that follow the price of a coin without owning it.
- Margin is the deposit that keeps a position open, and leverage lets that deposit control a much larger position.
- Perpetual futures have no expiry date and use a funding rate, a regular payment between longs and shorts, to stay close to the spot price.
- If the price moves against you and your margin runs low, the exchange can close the position (liquidation), and fees may be added.
- Futures are a high-risk product: learn on paper or with a small amount, use low leverage and decide your exit before you enter.
In this article · 9 min read
- Crypto futures trading: a short definition
- How crypto futures trading works
- Dated futures and perpetual futures
- Margin, leverage and liquidation
- The real risks
- Futures, spot and the bot
- How to start with crypto futures trading, step by step
- Checklist before opening a position
- Frequently asked questions
- Sources
Crypto futures trading: a short definition
In its general form, a futures contract is, according to Wikipedia, "a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future". Traditional futures exist on oil, wheat, currencies and stock indexes, and their prices are settled every day: the difference between the agreed price and the current price is re-evaluated daily, and the exchange moves money between the two sides' accounts.
Crypto futures apply the same idea to coins such as bitcoin or ether. Many of these contracts are cash-settled: nobody delivers any coins, and the profit or loss is simply paid in the account currency or in a crypto collateral. So you are trading the price, not the asset, which is also why you can open a short as easily as a long.
How crypto futures trading works
- You deposit collateral. This is the money in your futures account, usually in a stablecoin, in the coin itself or in another accepted asset.
- You choose a direction and a size. A long gains when the price rises, a short gains when it falls. You also choose the leverage, which decides how much margin the position needs.
- The exchange reserves margin. The initial margin is the deposit required to open the position. Then a smaller maintenance margin is the minimum needed to keep it open.
- Profit and loss are updated as the price moves. Gains add to your equity and losses reduce it, often in real time.
- You close the position, or the exchange does. You can close it yourself at any moment, or a stop loss or take profit order can do it for you. If your equity falls to the maintenance margin, the exchange starts liquidation.
A simple example with round numbers. You open a position worth 1,000 with 10x leverage, so you post 100 of margin. If the price moves 5% against you, the position loses 50, which is half of your margin. A move of about 10% against you would use up the whole margin, and in practice liquidation happens a little before that, because the exchange wants to keep a safety buffer and fees count too. The same arithmetic works in your favour, but it is the losing side that ends your trade.
Dated futures and perpetual futures
| Dated futures | Perpetual futures | |
|---|---|---|
| Expiry | A fixed date, after which the contract settles | None, you can hold it as long as the margin lasts |
| Keeping the price in line | The price converges to spot as expiry nears | A funding rate paid between longs and shorts |
| Main cost | Trading fees, sometimes a premium over spot | Trading fees and funding payments |
| Typical use | Planned exposure up to a date | Short-term and active trading |
Perpetual futures are the form most crypto traders know. According to Wikipedia, they are cash-settled and can be held without a maturity date, and periodic funding payments between longs and shorts are what keep their price close to the underlying price. The idea was proposed by the economist Robert Shiller in 1992, and it saw wider adoption in crypto from 2016, when exchanges such as BitMEX offered it.
When funding is positive, longs usually pay shorts, and when it is negative the opposite happens. The rate and the interval depend on the exchange, so read its rules before you hold a position for days.
Margin, leverage and liquidation
Margin is a performance bond, a security deposit, and not a down payment on the asset. On Kraken's derivatives platform, according to its support page on leverage and margining, updated 13 February 2026, leverage of up to 50x is available, the initial margin starts from 2% and the maintenance margin from 1%. When collateral falls below the maintenance margin, the liquidation process begins. The same page explains that an equity protection process is meant to keep an account from going negative, but not every platform works this way, so check yours.
Liquidation is the main risk of crypto futures trading, and it grows with leverage. Higher leverage means a smaller price move is enough to wipe out the margin. Perpetual contracts add another point: in very volatile markets, some exchanges use auto-deleveraging, where profitable traders can be forced to give up part of their gains to cover losses on the other side.
Kraken's guide to conditional orders, dated 19 June 2026, describes a common approach: place the stop loss above your liquidation price. If the price hits your stop first, the position closes at a predictable level and you pay only the standard trading fee. If it reaches liquidation instead, the exchange closes the position and may charge an additional liquidation fee. Our article on stop loss and take profit shows how to choose these levels.
The real risks
The futures regulator CFTC states in its customer advisory on virtual currency trading that entering futures contracts through leveraged accounts can amplify the risks of the product, and that customers may lose more than their initial investment. It describes speculating in virtual currency futures as a high-risk transaction and warns that there is no guaranteed investment or trading strategy.
More generally, the European supervisory authorities, including ESMA, warned in 2022 that many crypto-assets are very risky and speculative, that you may lose all the money you invest, and that prices can fall and rise quickly over short periods. Futures add leverage on top of that volatility.
The practical risks to keep in mind:
- Liquidation. A position can be closed for you at a loss you did not plan for.
- Losses larger than the margin on some platforms. Terms differ, and some products or accounts can lose more than the deposit.
- Volatility and gaps. Prices can jump past your stop level, so the fill may be worse than the price you set.
- Funding and fees. They add up when positions stay open for long periods or trades are frequent.
- Emotion. Leverage makes small moves feel large, and many people close too early or add to a losing position.
- Platform and counterparty risk. The exchange holds your collateral, so its security and rules matter.
Futures, spot and the bot
| Spot buying | Futures trading | |
|---|---|---|
| You own the coin | Yes | No, you hold a contract |
| Profit when the price falls | No, apart from selling earlier | Yes, with a short |
| Leverage | Normally none | Often available |
| Maximum loss | The amount invested | Can be reached quickly, and on some platforms exceeded |
| Extra costs | Trading fees | Fees, funding, possible liquidation fee |
| Complexity | Lower | Higher |
If you are new to crypto, start with spot: our guide on how to buy cryptocurrency safely is the place to begin. Futures make sense once you understand orders, margin and what a loss feels like in practice.
Futures are also the type of market that automated systems use. Our overview of the crypto trading bot explains what a bot does and where it can go wrong. Crypto Go Bot, which we built, trades on your own Kraken account through a Futures trading API that you create. It can open both long and short positions, and it places take profit and stop loss as real orders on Kraken. The bot runs on your own server and cannot withdraw from your account. It is still futures trading: losing trades are normal, leverage and volatility remain, and no setting rules out losses.
How to start with crypto futures trading, step by step
- Understand the basics first. Know what a long, a short, margin, leverage and liquidation are before you risk money.
- Choose a platform carefully. Check how it describes its margin rules, liquidation process, fees and funding, and secure the account with two-factor authentication.
- Practise without real money if you can. Many platforms offer a demo mode or a test environment.
- Start with a small amount you can afford to lose. Use low leverage, if any, so that a normal price swing does not liquidate you.
- Decide the exit before the entry. Set the stop loss, check that it sits above the liquidation price, and know your take profit.
- Keep a spare margin. Do not use all your collateral on one position, so you can absorb a swing.
- Review every trade. Note the entry, exit, fees and funding, and what you would do differently.
Checklist before opening a position
- I know my liquidation price and my stop sits before it.
- I accept the loss if the stop is hit.
- I know the funding rate and the fees for this contract.
- My leverage is low enough that a normal daily move will not liquidate me.
- I am using money I can afford to lose.
- I know how to close the position quickly.
Frequently asked questions
What is crypto futures trading?
It is trading contracts that follow the price of a cryptocurrency, using a margin deposit and, often, leverage. You can take a long position if you expect the price to rise or a short position if you expect it to fall, without owning the coin.
How are crypto futures different from buying crypto?
When you buy crypto you own the coin and the most you can lose is the amount invested. With futures you hold a contract, you can profit from falling prices, and leverage can make losses arrive much faster. You also pay futures-specific costs such as funding.
What is a perpetual future?
It is a futures contract with no expiry date. A funding rate, paid between longs and shorts at regular intervals, keeps its price close to the spot price of the coin.
What is liquidation?
Liquidation is the forced closing of a position when your equity falls to the maintenance margin. It usually happens at a loss, and some exchanges charge a liquidation fee on top.
Can I lose more than I deposit?
It depends on the platform and the product. Some platforms use mechanisms meant to stop an account from going negative, while the CFTC notes that in leveraged futures customers may lose more than their initial investment. Read the terms of your platform before you trade.
Is crypto futures trading suitable for beginners?
It is a high-risk product, and most beginners should first learn how spot markets, orders and risk management work. If you try futures, start with a small amount, low leverage and a stop loss placed before the liquidation price.
Sources
- Wikipedia, Futures contract
- Wikipedia, Perpetual futures
- CFTC, Customer Advisory: Understand the Risks of Virtual Currency Trading
- ESAs (EBA, ESMA, EIOPA), Warning on the risks of crypto-assets, 2022
- Kraken Support, Leverage and margining in derivatives, updated 13 February 2026
- Kraken Learn, How to set conditional orders on Kraken: stop loss and take profit, 19 June 2026
