Futures Contract
Futures contracts are financial derivatives that allow traders to buy or sell an underlying asset at a predetermined price and time in the future. They work on an exchangeA cryptocurrency exchange is an online platform that allows users to buy, sell, and trade cryptocurrencies. These exchanges serve as intermediaries between buyers and sellers,... like BitMEX by setting up an agreement between two parties to buy or sell an asset at a specific price on a future date.
On BitMEX, futures contracts are settled in BitcoinBitcoin is like a digital treasure that you can use to buy things online. It's like having a secret code that only you know, and..., meaning traders must maintain a Bitcoin balance to trade them. These contracts also have a leverage component, allowing traders to open a much larger position than they could otherwise afford with their balance.
Trading bots can use futures contracts to implement a variety of strategies, such as hedging, arbitrageArbitrage is a trading strategy that involves taking advantage of price differences for the same asset on different exchanges. For example, if Bitcoin is trading..., and directional trades. For example, a bot could use futures contracts to bet on a specific cryptocurrency’s price increasing or decreasing over time, or to lock in profits by selling contracts against a long position.