As part of my ongoing attempts to understand the world of crypto I have been researching the idea of futures. As far as I know, it is impossible to predict what is going to happen in the future. However, I have been following a number of youtubers who consistently make profit on trading in futures.

So how can it be? Surely buying and selling in the future is either guesswork or just gambling, neither of which seems to me to be a good long term strategy.

This only scratches the surface so don’t be surprised if I miss out important parts of the action.

I have found out that I can use “leverage” to allow me to make or lose multiples of the money that I put into a cryptocurrency. A base idea is that I have to deposit enough money to cover any possible losses and then I can buy a contract that takes the change in the value (in US$) of the currency and multiplies it by the leverage factor. This allows me to make very big gains compared to the actual change in the value of the underlying asset.

I don’t like the idea that the reverse is also true as my losses are also multiplied.

The way the you make money is by allowing the multiplier to act when the price goes up and by selling quickly if the price drops. Luckily the mechanics of it is taken care of by the software on the trading site. This is called a long contract, with the reverse action being called shorting.

I have been testing out the action and so far have not managed break even. This is because there are always charges to be met, so you have to make big gains to cover the costs as well as the loss making trades.

I have to say that it feels like gambling to me, and is very time-consuming.