Going long or short in Futures: What does it mean?

Futures sound complicated, but they’re not

At first glance, crypto futures can sound intimidating. Words like long, short, leverage, and contracts often make people think this is something only professional traders understand.

But at their core, futures are simply agreements about where the price of a cryptocurrency will go.

Instead of buying Bitcoin or Ethereum outright, you’re trading a contract that tracks their future price. That means you can try to profit from whether the market moves up or down.

In this guide, we’ll break down the basics: what crypto futures are, how they work, and what it means to go long or short.

What are crypto Futures?

They are financial contracts that let you agree to buy or sell a crypto asset at a set price on a future date.

The key point: you’re not buying the actual Bitcoin or Ethereum itself. You’re trading the contract that represents its price.

Imagine Bitcoin is at $30,000 today. A futures contract might let you agree to buy it next month for $32,000.

If the price goes above $32,000, your contract gains value. If it goes below, your contract loses value.

This is why people talk about “going long” or “going short” in futures. It’s simply choosing whether you think the price will rise or fall.

How do crypto Futures work?

Instead of owning the cryptocurrency itself, you trade contracts that follow its price. These contracts let you speculate on where the market is heading.

Here are the basics:

• Margin: To open a futures position, you put down a fraction of the trade’s value (called margin). It’s like a security deposit.

• Collateral: The assets you add to your account (like BTC, ETH, or stablecoins) to back your trading.

• Leverage: Futures often allow leverage, meaning you can control a larger position than the money you put in. For example, with 5× leverage, $1,000 lets you trade as if you had $5,000.

• Expiration or Perpetual: Traditional futures expire on a set date. But most crypto platforms today, like Nexo, offer perpetual futures. These contracts don’t expire, so you can keep a position open as long as you want, closing it whenever you decide.

On Nexo, you can:

• Trade over 100 perpetual contracts, so you never need to track expiration dates.
• Use 2x up to 100x leverage, depending on the asset.
• Choose collateral such as BTC, ETH, XRP, and USDC in your Futures Wallet.
• Manage your risk with trigger orders like Take Profit and Stop Loss.

Going long vs. going short

When people talk about going long or going short in crypto futures, they’re just describing which direction they think the price will move.

Going long → You believe the price will go up.

• Example: Bitcoin is $30,000. You go long on a futures contract because you expect it to rise. If it goes to $33,000, your contract gains value.
• Everyday analogy: It’s like buying concert tickets early because you think demand (and prices) will rise. If you were right, you could sell them later at a higher price.

Going short → You believe the price will go down.

• Example: Bitcoin is $30,000. You go short on a futures contract because you expect it to fall. If it drops to $27,000, your contract gains value.
• Everyday analogy: It’s like borrowing your friend’s bike to sell it today, expecting the shop to discount the same model next week. You buy it back cheaper, return the bike, and pocket the difference.

Why people trade Futures

Futures aren’t just for professional traders. People use them for a few main reasons:

• Speculation → Many trade futures to try and profit from short-term price moves. Since you can go long or short, you’re not limited to betting on prices going up.

• Hedging → Investors who already own crypto sometimes use futures to protect themselves against downside. For example, if you hold Bitcoin but think the price might fall, you can open a short futures position. If the price drops, your loss on Bitcoin is offset by your gain on the short.

• Leverage → Futures let you control a larger position with less upfront money. This magnifies potential profits, but also magnifies losses, which makes leverage a tool to use carefully.

The risks of Futures

Here’s what you need to know:

• Leverage cuts both ways → Just as it can multiply gains, leverage can also multiply losses.

• High volatility → Crypto markets move fast, and futures can amplify that volatility.

• No asset ownership → When you trade futures, you don’t actually own the underlying crypto — you’re trading contracts tied to its price. That means you don’t benefit from long-term holding or yield opportunities.

• Discipline required → Futures demand constant monitoring and risk management. They’re not “set and forget” investments.

Frequently asked questions

1. What are crypto futures?

Crypto futures are contracts that let you agree to buy or sell a cryptocurrency at a set price in the future. You’re not trading the cryptocurrency itself but contracts based on its price.

2. How do crypto futures work?

They work by letting you open positions with margin. If the market moves in the direction you thought (long or short), you make a profit. If it moves against you, you take a loss. Some futures expire, while perpetual contracts stay open until closed.

3. What does going long or short mean in crypto futures?

Going long means you expect the price to rise, while going short means you expect the price to fall.

4. Why do people use crypto futures?

To speculate on short-term price moves, hedge against risk in their portfolio, or use leverage to control larger positions with less capital.

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