Futures, in slang "fyuch," "fyucha," or "fyucher," is a derivative financial instrument: a standardized fixed-term exchange contract for the purchase and sale of an underlying asset. When it is concluded, the seller and the buyer agree only on the price level and the execution date, while the contract itself is traded on the exchange under uniform rules.
On the cryptocurrency market, the underlying asset of a futures contract is usually a digital coin. Most such contracts are cash-settled (non-deliverable): no physical transfer of the asset takes place, and only monetary settlements are made between the parties — for the amount of the difference between the contract price and the actual price of the asset on the execution date.
What futures are for
- Hedging: protection against an unfavorable change in the price of the underlying asset.
- Speculation: an attempt to profit from price fluctuations without owning the asset itself.
- Access to leverage: futures often allow trading with borrowed funds.
It is important to understand that trading futures involves heightened risk, especially when using leverage: losses can repeatedly exceed the initial deposit. For this reason, this instrument requires an understanding of contract mechanics and discipline in risk management.
