Types of ETH Futures Contracts and Their Pros and Cons

If you’ve ever been intrigued by the idea of trading Ether using the futures market, you may be wondering what you should know. Before you start trading, you should learn about the different types of futures markets, including Ether Futures Perpetual, Quarterly, and Cross Margin Mode. These are only suitable for advanced traders. This article will provide you with an overview of the various types of Ether futures trading contracts and their pros and cons.

Cross Margin Mode

Huobi launched a new product last week: the Cross Margin Mode for ETH futures. This unique feature enables users to share margins among open positions. This gives traders greater flexibility and avoids unnecessary liquidation. In addition, Huobi offers competitive transaction fees and VIP+1 policy. To find out whether the Cross Margin Mode is right for you, read on to learn more. This article focuses on the pros and cons of Cross Margin Mode for ETH futures trading.

The main advantage of Cross Margin Mode over Isolated Margin Mode is that traders can control the amount of leverage they use for each position. With a BTCUSDT perpetual contract, traders can set a maximum leverage of 100x. With this, the initial margin for a position is the contract value multiplied by 100. Consequently, the maximum number of contracts in a cross margin mode is smaller than the maximum risk limit.

Ether Futures Perpetual

The main difference between spot trading and Ether Futures Perpetual trading is that the former allows buyers and sellers to take long and short positions on the ETH market. The former allows buyers and sellers to earn profits even when the market goes down, while the latter only benefits buyers when it goes up. This is because ETH futures contracts have an inbuilt leverage that multiply your returns. It is also possible to trade profitably during both bull and bear markets, while spot trading only benefits those who take advantage of bull runs.

In a perpetual futures contract, the buyer holds a long position, committing to purchase Ether at a certain price at a future date. The seller, on the other hand, commits to sell Ether at a predetermined price in the future. The underlying currency is not included in the index, so the price is determined using average asset prices and trading volumes. This way, a buyer may choose to buy Ether if they believe the price will rise in the future, while a seller can take a short position.

Ether Futures Quarterly

There are several types of Ether futures on Binance, including perpetual and quarterly. Perpetual contracts do not expire, but they come with a funding fee. Funding fees are paid peer-to-peer, so each trader either receives or pays the funding fee based on their position. The fees are calculated every eight hours. For each contract, the total amount of funding will be adjusted to reflect the current market price.

While this is a major financial product, it is not without flaws. Ether futures contracts enable investors to speculate and hedge on the price of the cryptocurrency. By September 2021, there were over 130,000 contracts traded. This is a sign of the maturation of the crypto trading market. But despite these flaws, many people are still trading Ether. Even so, Here are many risks associated with trading these cryptocurrencies.

Related Articles

Back to top button