ByBit Futures

ByBit is one of the only exchanges that offers futures of cryptocurrencies to the general public. In this article we look at the features of the ByBit futures contracts.

Table of Contents

What are ByBit futures?

A ByBit future contract is an agreement between two parties to buy or sell an asset in the future at an agreed price. Futures refers to a method of speculating on the price of cryptocurrencies, without actually owning them.

They also enable margin trading with high leverage. This is what makes futures so attractive. You can trade with bigger positions than you actually own. But this comes with great risk also.

What futures can you trade on ByBit?

Inverse future contracts on Bybit uses specific cryptocurrencies such as BTC/ETH/EOS/XRP as the base currency. They are quoted in USD but settled with the chosen base currency.

Can you trade on leverage on ByBit?

On Bybit users can use leverage up to 100x. But be careful, there is a higher risk of loss when using that amount of leverage. Beginners should avoid using high leverage, and should consider a minimal leverage level.

Selected leverage will decide what the margin is required for trading. For example, if a trader uses 10x leverage, the position will have 10% of his funds, and will borrow the rest from the exchange/users.

What is ByBit liquidation explained?

On Bybit, liquidation occurs when crypto assets are forcibly sold due to the partial or total loss of the trader’s initial margin. This happens when a trader cannot meet the margin requirements for their leveraged position, meaning they have insufficient funds to keep the trade open.

When a trader has insufficient margin, ByBit will automatically close out the position, resulting in a loss of funds for the investor. Therefore is risk management very important because a liquidation can lead to a total loss of the investment. See a live liquidation event below…

What is funding on ByBit?

To keep the futures contract price close to the spot price, there is a mechanism called funding. Where traders are paying each other based on their open positions. 

If the funding rate is positive, long position holders pay short position holders if it’s negative, shorters pay longer. These rates will depend on whether the contract’s price is higher or lower than the spot price and is carried out every eight hours.

Does ByBit have a testnet?

Yes, Bybit offers a testnet that allows traders to trade with worthless cryptocurrencies. This enables them to get familiar with the trading platform interface before switching to the real deal. If you are interested you can create an account by visiting this testnet page.

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