Futures trading: a beginner's guide

Futures contracts let you go long or short with leverage. Profits and losses are multiplied — so is the risk.

Key terms

• Leverage — 1x to 125x on select pairs. Higher leverage means higher liquidation risk.
• Margin — the collateral backing your position. Isolated margin caps loss to that position; cross margin shares balance across positions.
• Liquidation — when margin falls below the maintenance requirement, the position is force-closed.
• Funding rate — periodic payments between long and short traders on perpetual contracts.

Risk checklist before opening a position

1. Start with low leverage (3x or less).
2. Set a stop-loss for every position.
3. Use isolated margin while learning.
4. Never trade with funds you cannot afford to lose.