Futures
A futures contract is an agreement to buy or sell an asset at a set price on a future date. Futures let you profit from both rising and falling prices, usually with leverage.
How it works
Buying a future (going long) means agreeing to buy the asset at the contract price at expiry; selling (going short) means agreeing to sell. In crypto you usually never receive the coins: profit or loss is paid in money based on the price difference (cash settlement). Physically delivered futures exist too.
You only need collateral (margin) to open a trade, not the full contract value, which is why futures are traded with leverage. Profit and loss update all the time, and if margin runs short the position is liquidated.
Futures are used for speculation, for hedging (a miner sells futures to lock in the price of future output) and for arbitrage. In crypto the most popular kind is the perpetual future, which has no expiry date.
BTC is $60,000. You sell (short) a future for 0.1 BTC at 5x leverage, with $1,200 margin. If price drops to $57,000, you make 0.1 × $3,000 = $300, or +25% on margin. If it rises to $63,000, you lose $300, or −25% of margin.
The main mistake is confusing a future with owning the coin. With futures you hold no BTC, but you do have leverage, liquidation and, on perpetuals, funding. Beginners should start on spot, and on futures use minimal leverage and a stop on every trade.
Questions and answers
What are futures in simple terms?
A future is a deal to buy or sell an asset at a fixed price later. People trade it for the price difference, usually with leverage.
What is the difference between futures and spot?
On spot you buy the actual coins and pay in full. On futures you trade a contract on margin, can go short, and risk liquidation.
Can you lose more than you invest with futures?
On crypto exchanges you usually lose only the position's margin, but in cross margin mode your whole futures balance is at risk.
Related terms
Read next
How buying a coin on spot differs from trading futures, what each one costs you, and where beginners most often lose money.
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Updated: 2026-10-19