Blog Getting started Think you know the market? Predict and win with Futures

Think you know the market? Predict and win with Futures

date May 19, 2021 time 5 min read 538 views

Hey folks,

Have you ever tried predicting crypto price swings?

It’s a challenge – but one that could earn you a big reward!

Today, we’ve launched Futures, an investment product that takes advantage of our lending model to pay you up to 150% profit when you time the market correctly. 

Please note – Futures is currently only available to non-US residents.

What is Futures and how does it work?

Futures is half investing, half borrowing. 

You borrow a cryptocurrency expecting it to rise or fall in price and then repay when your prediction pays off, keeping the profits. 

First, you decide whether the price will rise or fall.

Then you enter an mount of USD as collateral for your borrowed crypto. 

We then buy this cryptocurrency at the current market price using 50x leverage. (In other words, we buy 50x the value of your collateral.)

This is now your Futures position.

If the price of the crypto moves 3% in your predicted direction, your position will automatically close and you’ll earn 2.5x the amount you put in (a profit of 150%).

However, if the price moves 2% in the opposite direction, you lose your USD collateral. 

You can, of course, take a smaller profit or minimize losses at any time by repaying early. 

Please also note we charge a 0.2% fee on the total leveraged position which is paid when you open your position (regardless of whether your prediction is correct or not).

An example Futures position

Let’s say the price of ETH is $3,000. 

You think the price is low and expect it to rise soon.

You choose a “Rise” position and enter a USD collateral amount – let’s say $5. 

You also need to ensure you have enough in your balance to cover the 0.2% fee, which in this example would be $0.50. 

To open this “Rise” position at $5, you would therefore need $5.50 in your balance.

Then, once opened, if the price rises 3% to $3,090, you’ll add $7.50 to your $5 position, bringing your net return (after the fee) to $7:

Profit: 150% of $5 = $7.50

Fee: 0.2% of ($5 x 50) = $0.50

Net return: $7 

Total back in your account: $12

If the price falls 2% to $2,940, you lose your $5 collateral but have also paid the fee, bringing your net loss to $5.50. 

You’re free to repay early to take a smaller profit or loss. 

What are the risks?

The risk is to your position amount. If your prediction fails to come true, you’ll lose all or some of your USD collateral (depending on whether you repay early or wait for your position to close automatically). 

To cap potential losses, your Futures position is automatically repaid from your USD collateral when the price moves 2% in the opposite direction to your prediction. The maximum you can lose, therefore, is the value of your USD collateral (and fee). 

We’ve also capped each position at $100 with a total of $5,000 across your account so you don’t accumulate losses. 

It’s important not to “chase gains” while using Futures but accept a loss and move on. It’s extremely hard to time the market correctly, so think of Futures as a fun diversion rather than a full-time investment strategy. 

Ready to get started?

Practice trading now with your demo account (make sure it says “Demo” on the right), or when you’re ready, open a live position.

FAQs

What is Futures?

Simply put, Futures is a lending product where you borrow crypto from us (using your USD as collateral) to profit from a price prediction.

For example, if you believe ETH will rise in price, you put down USD collateral and we buy the equivalent amount of crypto at 50x leverage. 

If your prediction is right, you could earn up to 2.5x your collateral as a return. If you’re wrong, you lose your collateral. 

You can repay your Futures position at anytime, either to take a smaller profit or minimize the loss of your USD collateral. 

What does 50x leverage mean?

50x leverage simply means we buy 50 times more crypto than the amount of USD collateral you put down. That’s why small price changes have a big effect on profits and losses. For example, if you put down $10 as collateral, we’ll buy the equivalent of $5,000 in your chosen cryptocurrency. 

Then, if the price moves up to 3% in your predicted direction, you earn 150% of your USD collateral as a return. However, if it moves up to 2% in the opposite direction, you lose some or all of your collateral. 

How much does Futures cost?

The fee for using Futures is 0.2% on the total leveraged position. For example, if you open a position at $10 at 50x leverage, the fee is calculated as follows:

0.2% of (10 x 50) = $1.

The fee is charged immediately after opening a Futures position and is payable whether your prediction comes true or not. You must have enough in your balance to cover both your USD collateral and the fee before you can open a Futures position. 

How much do I earn when my prediction comes true?

You start to profit as soon as the price moves in your predicted direction. For maximum gains, the price must move 3%. At this point, your position will close automatically paying you 150% of your position amount as profit. 

For example, if you open a “rise” ETH Futures position at $3,000 using $10 collateral, once the price hits $3,090, you earn $15 profit. Your position therefore closes at a total of $25 (including your returned collateral). 

You don’t have to wait for the price to hit 3% in your predicted direction, however. You can repay at anytime and take a smaller profit. 

What happens if my prediction is wrong?

Once the price moves away from your predicted direction, you’ll begin making a loss. Your position will close automatically once the price hits 2% in the opposite direction to your prediction, which will result in you losing all of your collateral. However, you can repay at anytime to minimize losses. 

Are there any limits to using Futures?

Yes, you must be KYC-approved and have enough in your balance to cover the position and the fee (which is charged as soon as you open a Futures position). 

The maximum you can use as collateral for a Futures position is $100, with an account limit of $5,000. These limits are to protect you from accumulated losses (and a nasty Futures habit!). 

Can I cancel a Futures position?

No. The only way to close a Futures position is by repaying the amount borrowed in USD from your collateral. 

Can I sell a Futures position to another customer?

Not at the moment, no. 

Is Futures like short selling?

Partly, yes. When you open a “fall” position, your Futures position becomes similar to short selling. However, Futures also lets you predict and profit from price rises. In that sense, it’s more flexible – and potentially more rewarding – than short selling. 

Is Futures risky?

Yes, you can lose some or all of your USD collateral when using Futures. You’re essentially making an educated guess on price changes, which can sometimes feel like looking into a crystal ball. As such, it’s best to think of Futures as a fun way to turn your predictions into profits rather than a full-time investment strategy. Please only put down USD collateral that you can afford to lose. 

Do I own the crypto in my Futures position?

No. When you put down USD collateral to open a Futures position, we buy the equivalent in cryptocurrency at 50x leverage. As you’re borrowing from us, you never take possession of the underlying asset. You own only the Futures position on that asset. We do all the purchasing, transferring, and so on which keeps things simple for you. 

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Chris Roper

Chris Roper

Communications Manager

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