With Bitcoin futures, you can trade Bitcoin without owning the underlying cryptocurrency. It allows you to speculate on the future price of the cryptocurrency without actually holding it. There are monthly contract offers by the Chicago Merc for cash. And as an investor, you take cash rather than Bitcoin when you settle the contract.

Why Bitcoin futures?

Here are some reasons you may want to consider Bitcoin futures:

Security and Trust

A certain level of security is attached to Bitcoin futures, giving investors the boldness and conviction to trade them. Bitcoin future trades happen on an exchange regulated by the Commodity Futures Trading Commission (CFTC). The CFTC is an independent federal agency that regulates the trade around commodity futures and promotes the market’s efficiency.

No Wallet Or Exchange Needed

Bitcoin futures are cash-settled - you do not need a Bitcoin wallet before you participate. Likewise, there is no Bitcoin exchange in the picture. The advantage of this system is that you do not own the underlying cryptocurrency, which means you are not at risk of holding a highly volatile currency that may yield some losses in cases of unfavorable price changes and market sentiments. Another advantage is that it excludes you from the cost of holding Bitcoin.

Limited Exposure To Risk

The risks you are exposed to are limited to price limits and position limits when trading Bitcoin futures. Position limit sets your ownership at certain boundaries, protecting you from a situation where an investor manipulates the price and moves the market for their gains at the expense of other traders and investors.

Tips For Trading Bitcoin Futures

1. Have a clear objective.
   You should have well spelled-out trading objectives. There must be goals you intend to meet. For instance, you might expect a certain level of profit. While some factors may be beyond your control, you can wield some level of control in the trade to make events turn out in your favor.
2. Make a trading plan.
   Having goals is not enough; you must have a clear plan on how to achieve them. So, develop a plan to guide your Bitcoin futures trading. Such a plan must take into cognizance the market you will be trading in. Hence, you should consider certain market behaviors that will affect your trade, else you come across as a novice trader.
3. Know your risk limits.
   Every trade involves some level of risk. Dedicating your time and fund to trading is a huge step that ought to yield the desired dividends. But you should be able to bear the outcome if anything happens and the market is not in your favor or your speculations are not correct as you think. So understand the risks you are dealing with and ensure you can manage them if things go south.

Trading Bitcoin futures can be easy if you have access to the necessary information. You will need to trade on an exchange, and a suitable exchange will facilitate price discovery and transparency. You are good to go once you have completed your registration and provided your personal data.