Futures are the type of derivative contracts. A derivative contract allows traders to speculate on the price movements of assets without ever physically trading the asset. A derivative contract is a tradable contract that is based on the price of an underlying asset. The contract is an agreement a trader makes to enter a trade based on the price of the underlying asset. For example, a Bitcoin future contract is based on the underlying asset, Bitcoin. Therefore, the contract price is very close or identical to the market price for Bitcoin. If Bitcoin goes up, the price of the Bitcoin contract goes up and vice-versa. The difference is that the trader is trading a contract and not Bitcoin. There are a number of different types of derivative contracts that all have different benefits for traders. Futures, perpetual swaps, contracts for difference and options are all examples of different derivatives. They are called derivatives because the price of the contract is derived from the underlying asset.
The advantages of derivatives contracts
Different trade directions: traders can profit from both price increases and price decreases, something that is impossible when you are simply buying and selling an asset.
High Leverage: traders can open trades that are worth more than their account balance using leverage.
Control exposure: traders can speculate on the price of an asset without ever owning it.
Low barrier to entry: traders are able to trade on an asset’s performance, without investing the equivalent amount upfront.
Risk management: for many traders, derivatives can provide a new means to manage trading risk.
The underlying asset for Stormgain Futures is Index price. The Index Price is derived from spot quotes from major cryptocurrency exchanges such as Kraken, Coinbase, Binance, etc.
A list of available futures on Stormgain platform can be found in the 'Futures’' tab:
Here is a Stormgain trading dashboard:
1. Trading chart
The chart shows the price movement of the chosen asset. Trading chart allows traders to use indicators to spot trends and assess when to enter and exit the market.
2. Instruments panel
This is the list of available instruments. The trader can also add new instruments by clicking on “plus” icon and choosing the necessary instrument from the list.
3. Order book
The order book displays buy and sell orders of a particular financial instrument. More information about Order book can be found by the link https://support.stormgain.com/articles/what-does-order-book-mean
4. Positions & Orders panel
This panel contains all the information about trader’s open or closed positions and orders.
5. Order creation panel
This panel is used to create an order and open a trade. There are a number of options when opening a position: trade direction (sell or buy), leverage, risk management (Stop Loss and Take Profit).