Last Updated on February 28, 2023 by Bitfinsider

What are Futures?

Futures are a form of derivative contract in which parties agree to exchange a particular commodity asset or security for another at a specified future date and at a specified price. On futures exchanges such as the Scallop Exchange, futures contracts can be traded.

Take Bitcoin for an example: With Bitcoin futures, a trader can buy or sell Bitcoin at a fixed price at a later time via the futures contract. When the contract expires, the buyer is obligated to acquire the asset while the seller is obligated to deliver it.

Hedging and speculating are typically the two applications of futures in the investment market. In hedging with futures, institutional investors and firms use futures contracts to hedge their operations or investment portfolios against commodity price risk. When speculating with futures, investment speculators place trades based on their informed predictions of the direction they think the market will take. For instance, a speculator may sell a commodity short and wait for the price to drop before buying it back at a profit if they believe it to be overpriced.

However, speculators may face increased risk as well due to margin calls that compound losses when trading futures. This is due to the fact that futures trades can sometimes benefit from substantially greater leverage than the underlying assets. 

Scallop Exchange Futures Guide

To start trading Futures on Scallop Exchange, you need to create an account. The process in itself is very easy, as the registration requires only an email address and password. You can refer to our guide on the step-by-step registration process here.

Note that you will be required to verify your email. Once your account is verified and ready to go, you can deposit funds into your account by following our guide here.

Once funds are deposited, you will have to transfer them into your ‘Futures Account’. After hovering over the ‘Balances’ option on the home page, click on ‘Futures Account’. Afterwards, you will see the following:

As there is only one option (USDT), click on “transfer” to proceed. You will subsequently be required to transfer crypto from your spot wallet to futures wallet. Indicate your preferred quantity and click “confirm” to continue.

After you have transferred funds into your futures account, it’s time to start trading. This is what the Scallop futures interface looks like:

Utilizing Leveraged Trading on Scallop Exchange

Scallop gives its users the ability to trade on certain currency pairs with a leverage of up to 125 times, as is the case with the BTC/USDT pair in this example.

The leverage function is fairly easy to set to adjust. On the leverage button located on the side of the interface, shown as “20x” as its initial setting, click on it to access the leverage options menu to modify the precise leverage as shown below:

Remember that using a large amount of leverage comes with significant risks and that inexperienced traders should not engage in this activity as far as possible. It is not recommended to multiply by more than 5x, as doing so significantly increases the likelihood of incurring a loss of capital. When investing in anything, especially in the futures market, you should never put in more money than you can afford to lose.

How To Trade Futures on Scallop Exchange

Due to their friendly user interface and experience, trading futures on Scallop Exchange is straightforward.

You can place the following types of orders on the platform:

1. Limit Order: Limit orders are used when you want to buy at a specific price.
   You must indicate the price at which you want to buy or sell in order to establish a limit order. Enter the quantity you desire to purchase in the size field. The Buy/Long button will open your position as soon as you press it. We will teach you how to close it and monitor it down below.
   
2. Market Order: Market order is used to purchase Crypto at the current order price.
   The quantity of the order is all that is required.
   
3. Stop Order: These are frequently employed as take-profit or stop-loss mechanisms.
   The stop price determines when your stop-limit order will convert to a standard limit order (conversely – a market order if you use a stop-market order). When you want to buy is indicated on the price tab. You must enter a stop price that, when reached, will cause the limit order to be executed at the chosen price if you want to use it as a stop-loss. To use it as a take-profit mechanism, it’s best to take advantage of the Stop-Market order.
   

Closing a Position

You will be able to check on the status of your position once it is open. You have two choices if you want to close your position. You may close at the best spot price immediately after the market closes or a limit close which enables you to designate the price at which the position should be closed.

With that, you are all set to go!

However, before you proceed, we would like to remind you again that high leverage is a form of trading that involves an extremely high level of risk, has the potential to result in losses, and should only be used by knowledgeable professionals who are able to effectively control their risks.