January 17, 2016


Bitcoin Futures Trading Tutorial

UPDATE –  Okcoin has closed their bitcoin futures markets.  Here are some alternatives:
Bitmex – Trade bitcoin and cryptocurrency futures with up to 100x leverage.  User who register from a U.S. IP address will not be permitted to trade on Bitmex.  –> NordVPN
Deribit – Trade bitcoin futures with up to 20x leverage – US Traders Allowed

OKCoin.com is the #1 Place in the world to trade bitcoin derivatives.  OKCoin has the most trade volume, liquidity, leverage, and settlement dates.   You can trade bitcoin and litecoin futures with up to 20x leverage.

OKCoin does not accept customers who signup or log in with a United States IP Address:  NordVPN

trade bitcoin derivatives with leverage

The way OKCoin works is simple,  just buy or sell bitcoin contracts.  One bitcoin contract is worth $100 in Bitcoin so with 10x leverage you need $10 worth of bitcoin in your account as collateral for each contract you want to trade.   If you think bitcoin price will rise, open a ‘Long’ position.  If you think price will go down, open a ‘Short’ position.  Use the bitcoin futures calculator to estimate your profit/loss for trades before you execute them.

OKCoin Futures Trading Example

The bitcoin price is currently $400 USD and I think it will go up to $450.

If I deposit 1 bitcoin as collateral, I can trade with up to $8000.  With that $8000 I can ‘Long’ 80 Bitcoin Futures Contracts, the equivalent to 20 Bitcoins at $400.

If price goes up to $450 my contracts are worth $9000.  My target is hit so I sell them.  The $8000 that I borrowed is returned and I keep the $1000 difference, which is paid out in Bitcoin. By trading that move I risked 1 Bitcoin and made a profit of 2.22 Bitcoins.

okcoin futures profit loss calculator

Alternatively, if the price goes down I have to be able to cover the losses and repay my loan.  To ensure the safety of their lenders, OKCoin force liquidates your position once it reaches a P/L of -80%.  If the price drops down to $384.62 my long would be liquidated and my 1 Bitcoin of collateral will be used to repay the lenders.   You can use the OKCoin Futures Calculator to manage your risks and setup a stop loss trigger order.

okcoin futures liquidation calculator

OKCoin Settlement Times

OKCoin Futures Settlement is when all trades are closed.  You can close your trade at profit or loss anytime before the settlement date, if you don’t it will be automatically closed for you at market price.  OKCoin has three different bitcoin futures markets, with weekly, biweekly, & quarterly settlement dates.

OKCoin futures contracts settle every Friday @ 8am UTC

You can withdraw bitcoin trade profits once you close your trade and the next Friday morning settlement occurs.