How to Trade Futures in FTX
What are the futures?
FTX lists futures on many coins including BTC, ETH, EOS, XRP, and USDT. Each coin has three futures: a contract that expire this quarter, a contract that expires next quarter, and a perpetual future.
What makes FTX futures different from other futures?
The futures listed on FTX differ from other major cryptocurrency futures in the following ways:
FTX futures are stablecoin settled: you deposit stablecoins as collateral for all of the futures, and your PNL is settled in stablecoins. This means that you get legitimate USD-based price exposure and settlement, without needing a bank account; you can also use the same base currency as collateral for all of the contracts, making it easy to shift your positions around.
FTX futures have a unique backstop liquidity provider program which jumps in to provide to accounts in danger of bankruptcy, helping to avoid clawbacks.
FTX futures have careful, measured margin calls to avoid large price dislocations.
FTX’s interface is similar to other trading platforms but with additional features catered to derivative traders.
We will use BTC as an example, select BTC from the top banner and bring us on to the BTC perp contract.
If we are looking to get "Long" we make sure obviously we are selecting Buy BTC in this top header.
If we are looking to get "Short" we select the Sell BTC header and that is going to allow us to open a Short position.
For now we are looking at opening a Long position, if I wanted to use a market order, this would automatically enter my position at market price and what i can do in here is I can select the amount of BTC that I would like to purchase for this Long position or I can select the amount in USD.
Place this position by pressing "Buy" button.
You can see my Order has been placed and scroll down here.
Frequently Asked Questions (FAQ)
How do the quarterly futures expire?
The quarterly futures expire to a TWAP of their associated index on the last Friday of every quarter between 2am and 3am UTC.
If you hold an expiring futures position, you will be credited with USD PNL equal to the expiration price shortly after.
What is a perpetual future?
Perpetual futures dont expire. Instead, every hour, each perpetual contract has a funding payment where longs pay shorts equal to [1 hour TWAP of Premium] / 24. This helps to keep the price of the perpetual futures in line with the price of the underlying index without ever closing down positions for expiration.
How do I post collateral?
Collateral for the futures is in stablecoins. The current set of accepted stablecoins is USDC, TUSD, USDP, BUSD, and HUSD.
To deposit or withdraw collateral, go to your wallet page and deposit either USDC, TUSD, USDP, BUSD, and HUSD. Depositing either will credit your account with USD, which is automatically used as collateral for all of your futures trades.
By default all margin is posted in USD in your wallet. USD can be funded by depositing USDC, TUSD, USDP, BUSD, and HUSD.
Balances of the following coins also count towards collateral:
|Coin||Weight (total)||Weight (initial)|
|Tokenized Stocks (e.g. AAPL, TSLA, etc.)||0.85||0.8|
By default all positions use the same collateral pool, and all USD, non-USD fiat, and above cryptocurrencies in your wallet count as collateral. Each subaccount has one central collateral wallet and uses cross margining for the account. Each subaccount has separate margin and collateral from other subaccounts.
If you want to use isolated margin create a subaccount for that position and move in collateral.
How can I determine my liquidation risk?
There are two ways to determine when your account would get liquidated.
#1: Estimated Liquidation Price
If you go to any market page there will be an informational box on the right hand side. You can find an Estimated liquidation price there; if you dont have any other positions on then your position will start to get liquidated if the futures price gets there.
#2: Maintenance Margin Requirement
Once again look at the informational box on the right hand side. You can also find your current amount of leverage used there, and your current margin fraction, which is just 1/leverage. Your account will begin to get liquidated if your margin fraction drops below the maintenance margin requirement, also displayed in the box. Maintenance margin fraction starts at 3% and increases with position size, so you will begin to get liquidated if your account gets to ~33x leverage (or less depending on position size).
In the example above the user has a margin fraction of 8%:
Position size = 1 BTC * 10,406.25 $/BTC = $10,406
Total collateral = $808.73
Margin fraction = 808.73/10406.25 = 8%.
They will get liquidated if their margin drops down to the maintenance margin requirement of 4%. That means theyll get liquidated if markets move 8% - 4% = 4% down.
Note that we try to liquidate accounts slowly, and we will stop if your accounts margin fraction gets above maintenance, so we might only have to liquidate part of your position.
If you are worried about liquidations and dont want to actively manage your margin, consider trading leveraged tokens; they allow 3x leverage and automatically rebalance to avoid liquidations.
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