Buying and selling
06 Buying and selling · Lesson 06

Futures

Futures looks like the same screen and is a different product. Here you do not buy the coin: you bet on the direction of the price with borrowed money, and there is a point where the exchange ends it all without asking.

By the end of this lesson

You will know how to work out, before opening, where your position would be liquidated.

Renato UlianovNarration over the screen

The futures screen. It looks like spot, and it is not: note the “Perp” next to the pair and Positions below.
The futures screen. It looks like spot, and it is not: note the “Perp” next to the pair and Positions below.
Three words

Margin, leverage, liquidation

Margin is your money parked as collateral. Leverage is how many times bigger the position is than that collateral. Liquidation is the moment the collateral runs out and the exchange closes the position — automatically, without warning and without consulting you.

The three sit in one sentence for a reason: at N times leverage, a move of 1/N against you eats the whole margin. At ten times, ten per cent. Not an extreme case: arithmetic.

Look at the bar on the screen itself: it runs from 1× to 200×. At the right-hand end, half a per cent against you eats the whole margin — and half a per cent, in crypto, happens while you read this sentence.

Before opening the futures account, the exchange asks you to read this. The line about the margin balance is worth reading slowly.
Before opening the futures account, the exchange asks you to read this. The line about the margin balance is worth reading slowly.
The leverage box. The bar runs from 1× to 200× — and the number you leave here decides how far from today's price your liquidation sits.
The leverage box. The bar runs from 1× to 200× — and the number you leave here decides how far from today's price your liquidation sits.
Margin mode and leverage, at the top of the form. The most expensive decision on the screen, and the easiest to skip.
Margin mode and leverage, at the top of the form. The most expensive decision on the screen, and the easiest to skip.
Isolated or cross

How much of the account is at risk

In isolated mode, the collateral for that position is only what you set aside: the worst case is losing that. In cross mode the whole wallet balance backs it — the position survives longer, and the worst case is far bigger.

For a beginner, isolated is the mode that caps the damage at a number you chose on purpose.

Both modes live in the same leverage box, and the change applies only to the contract open on that screen — switching here does not switch it on the other pairs.

Cross uses your whole wallet balance as collateral; isolated uses only what you set aside for that position.
Cross uses your whole wallet balance as collateral; isolated uses only what you set aside for that position.
The price that liquidates

Mark price, not the last trade

Liquidation does not look at the last traded price: it looks at the mark price, computed from an index across exchanges. It is a protection — it stops a lone wick in a thin book from liquidating everyone — and it is also why a position sometimes closes at a price you never saw on your screen.

Both numbers sit side by side at the top. Worth reading both.

Mark price and index price, side by side. Liquidation looks at the mark price.
Mark price and index price, side by side. Liquidation looks at the mark price.
The exit before the entry

TP/SL and reduce only

The form lets you set the exit together with the entry: TP/SL is the price where you want to leave winning and the price where you accept leaving losing. Deciding that beforehand, calmly, is the difference between a plan and a reaction.

Reduce only guarantees that the order can only shrink the position — never accidentally open a new one on the opposite side.

The futures form with the account open. Note the buttons are not “buy” and “sell” but long and short — and that the cost appears under each one.
The futures form with the account open. Note the buttons are not “buy” and “sell” but long and short — and that the cost appears under each one.
TP/SL sets the exit together with the entry. “Reduce only” stops an order of yours from opening the opposite side.
TP/SL sets the exit together with the entry. “Reduce only” stops an order of yours from opening the opposite side.
Before opening

Read the contract

Every contract has a minimum size and a value per unit, and that defines the smallest step you can trade. It is written in Contract Details, at the end of the form — and it is the difference between opening the position you meant and a much larger one.

The contract details. The contract value tells you the size of the smallest step you can trade.
The contract details. The contract value tells you the size of the smallest step you can trade.
What goes wrong here

High leverage “just to test”. The test is exactly what liquidates, because the margin is small.

Not knowing the liquidation price. If you cannot state that number before opening, do not open.

Confusing the position with the coin. In futures you hold no bitcoin: you hold a contract on its price.

This lesson's ruler
  • I can say, in one sentence, what margin, leverage and liquidation are.
  • I know where my liquidation price would sit before opening the position.
  • If either answer is “more or less”, it is still time to stay on spot.
When you get stuck

Every screen on the exchange has Customer Support in the footer, and the Help Centre has self-service for the three things that most often get stuck: resetting the password, finishing verification and re-doing the two-step app. If none of that solves it, the written channel is cs@bydfi.com. Do not guess: a ticket costs ten minutes, a guess can cost the account.