Together with the trader we understand how to earn when the cost of bitcoin is lost by using futures.
According to CoinMarketCap, bitcoin first crossed the $ 10,000 mark on November 28, 2017. Since then, in two short months, its price has doubled to $ 20,000 and returned back to $ 10,000.
99% of people who bought bitcoins can earn on it only when the price of the crypto currency is growing. You can earn on the fall by using bitcoin futures. But, unfortunately, futures on the CBOE and CME exchanges are not available to ordinary holders of bitcoins because of their high cost. So, one lot on the CBOE exchange is equal to one bitcoin, and the size of one contract on the CME exchange is equal to five bitcoins. That is, for trading on these exchanges you need to have a minimum deposit of $ 10,000. But there is a way out for small traders.
The Chicago Mercantile Exchange CME uses specially designed bitcoin indexes to determine the execution price of futures contracts on the day of expiration. The creator and administrator of these indices is not the CME itself, but its partner is the London company Crypto Facilities Ltd.
What is Crypto Facilities (CF)
Crypto Facilities is a crypto exchange that is located in London and is registered with the Financial Conduct Authority.
That is, it is a company whose activities are regulated by the supervisory authority of one of the most respectable jurisdictions in the world, and it is no coincidence that such a financial monster as the Chicago Mercantile Exchange CME has chosen this company as its partner to launch bitcoin futures.
The creators of this crypto-exchange are the former top managers of the world’s leading banks: Goldman Sachs, Morgan Stanley, BNP Paribas and Société Générale.
The CF trading platform started work three years ago: in 2015, bitcoin futures were launched here. Then, in the fall of 2016, the CF exchange launched futures for Ripple XRP. In November 2016, in partnership with the Chicago stock exchange CME, indexes for bitcoin were launched.
Since the launch of Crypto Facilities futures for Bitcoin and Ripple and until recently the nominal value of the contracts here was also prohibitive for small traders: 1 BTC and 10,000 XRP, respectively.
And only three months ago, on October 29, 2017, the CF exchange turned the face value of contracts and made its futures inversion: now the face value of contracts is only one dollar, i.е. Now you can open a futures position with a minimum deposit of $ 1
Leverage and turbo futures
Trading on CF is marginal: bitcoin and ripple futures have a 6-fold leverage.
For the most desperate traders are offered turbo futures for bitcoin with a 50-fold shoulder. In other words, to open a position for 1 bitcoin, you just need to have a deposit of only 0.02 bitcoins. This means that you can double the amount of your bet if the price of bitcoin changes to your side by only 2%. Either lose the amount of your bid if the price goes 2% in the wrong direction.
Of course, this is an extreme option. In fact, you can make any size of the bet, starting from $ 1 and up to 6 times the size of your deposit for ordinary futures and up to 50 times the deposit amount for turbo futures.
Terms of trade
To date, the CF exchange has 4 types of futures contracts:
– Futures for a couple bitcoin-dollar with a 6-fold shoulder;
– Turbo-futures for a pair of bitcoins-dollars with a 50-fold shoulder;
– Futures for a pair of ripple-dollar with a 6-fold shoulder;
– Futures for a pair of ripple bitcoins with a 6-fold shoulder.
By the expiration date, weekly futures are issued for one and two weeks, and quarterly futures for one and two quarters.
Futures settlement: expiration occurs at 16:00 GMT on Friday, execution is carried out at 18:00 by calculating the difference between the opening price of the position and the value of the settlement index on expiry day. Trade is conducted around the clock in 24/7 mode.
To start trading, you need to verify the account with the help of identifying documents, as well as pass a small test for knowledge of derivative financial instruments.
Deposit to the stock exchange can be made only by two crypto-currencies: bitcoin and ripple; fiat currencies are not accepted.
Unlike many other crypto-exchanges, Crypto Facilities does not use a single common purse for all customers. Each client has a separate individual address in the Bitcoin and Ripple network, and your deposits are stored on cold wallets.
Here’s a real example of how each of you can make money by dropping bitcoin:
On January 29, a short position of $ 500 was opened: a week-long turbo futures was sold for $ 11,143.
After 2 days the current futures quote is $ 9,414 and the current profit for this position is 0.0056 bitcoins ($ 55.7).
Profit or Loss in Base Currency = (1 / Futures Entry Price – 1 / Futures Exit Price) * Position Size
(1/11143 – 1/9914) * (-500) = 0.0056
The drop of bitcoin was = 11,143 – 9914 = 1229 or 11%.
The profit was = 55.7 / 500 = 11.1%.
Thus, short-term profit compensated for the loss from the drop in the price of bitcoin, while in this transaction a leverage (leverage) of 0.5 was used, that is, half of the deposit size or 1/100 of the maximum possible 50-fold leverage.
For those who wish to trade on Cryptocurrencies rates with a shoulder up to 1:500 and 19 Cryptocurrency pairs, we recommend LIBERTEX
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