Can You Profit When Bitcoin Falls? How to Trade Futures Contracts
As the digital currency market represented by Bitcoin continues to expand, various forms of derivatives trading have gradually emerged alongside spot trading as risk hedging tools, with futures contract trading being the most prominent.
What is Futures Contract Trading?
Futures contracts are the most common form of trading contracts in the digital currency derivatives market. Digital asset futures contract trading refers to an agreement between buyers and sellers to trade a certain asset at a specified price at a future time.
This allows investors to earn profits from price fluctuations of the underlying asset through long or short contract trading, in addition to earning returns from price increases in coin-to-coin/spot trading. For example, when bullish on BTC and going long, rising BTC prices bring profits while falling prices bring losses; conversely, when bearish on BTC and going short, rising BTC prices bring losses while falling prices bring profits. Therefore, there are opportunities to profit even when Bitcoin falls, earning returns from price fluctuations through futures contract trading.
Additionally, using futures contracts as a trading tool and employing hedging strategies can achieve risk mitigation, and stable profits can be earned through arbitrage models.
Besides enabling bidirectional long-short trading, another major feature of futures contract trading is the ability to amplify principal through leverage. The leverage multiplier determines how many times the principal is amplified. The existence of leverage means that digital assets, which already carry relatively high investment risks, have both their returns and risks magnified accordingly. Compared to spot trading, futures contract trading is a higher-risk investment activity. New users need to understand the basics of futures contract trading before operating cautiously to control risks.
Types of Futures Contracts
OKX offers two types of futures contract products based on whether there is an expiration delivery date: perpetual contracts and delivery contracts.
Within these two major categories, contracts can be further subdivided by margin type into U-margined contracts and coin-margined contracts. U-margined contracts include both USDT-margined and USDC-margined contracts.
1. Delivery Contracts
Delivery contracts have a delivery date, which means both parties agree to settle the contract at a specified price on the delivery date. When the contract expires and positions remain open, regardless of profit or loss, positions will be closed at the arithmetic average price of the index price during the last hour. Currently, OKX offers delivery contracts with four delivery cycles: current week, next week, current quarter, and next quarter.
2. Perpetual Contracts
Perpetual contracts have no delivery date and never expire. Since there is no expiration delivery date, perpetual contracts use a funding fee mechanism to anchor the contract price to the spot price, thereby bringing the price difference between the underlying asset spot and perpetual contract back to a reasonable expectation.
Funding fee = Position value × Current funding rate. (The current funding rate is determined by the price difference between the contract price and spot index price during the previous funding fee period)
If the current funding rate is positive, longs pay funding fees to shorts; if the current funding rate is negative, shorts pay funding fees to longs. (Funding fees are exchanged between users, and the platform does not collect this fee.)
OKX funding fees are settled every 8 hours, at 08:00, 16:00, and 24:00 (HKT) daily. Users only need to pay or receive funding fees if they hold positions at these three moments. If positions are closed before the funding fee settlement time, no funding fee payment or receipt is involved.
3. Coin-Margined Contracts
Futures contract trading requires a small amount of funds paid at a certain ratio based on the contract price as financial collateral for fulfilling the contract, which is the contract margin. The distinction in margin types allows users to freely choose whether to use base digital currencies USDT/USDC as margin or the corresponding coin of the trading pair as margin.
Coin-margined contracts use the underlying asset as both margin and settlement unit. The contract underlying is the USD index of that coin (for example, the BTC contract underlying is the BTC USD index). Contract face value rules: The contract face value is a certain USD value, with BTC at 100 USD; contracts for ETH and other coins are at 10 USD.
Coin-margined contracts can be used as hedging tools for held assets, and when holding long positions, users can simultaneously enjoy both the value appreciation of the base asset and contract returns.
4. U-Margined Contracts
U-margined contracts (U-margin contracts) are contract types settled in U, where users need to use stablecoins USDT/USDC as collateral assets. As long as the account has USDT/USDC, users can trade contracts for multiple coins, with profits and losses settled in USDT/USDC.
The contract underlying is the USDT/USDC index of that coin (for example, the BTC contract underlying is the BTCUSDT/BTCUSDC index). Contract face value rules: The contract face value is a certain quantity of crypto assets, such as 0.001 BTC for BTC and 0.001 ETH for ETH.
Because only USDT/USDC is used as margin, margin can be flexibly allocated between contracts, eliminating concerns about depreciation risk of the underlying currency. Additionally, the calculation formula is more concise, making it convenient for users to calculate profits and losses.
How is Futures Contract Trading Conducted?
1. Choose Contract Type
Users decide on the long-short direction (buy to open long\sell to open short) based on their judgment of BTC price trends, and select the contract type based on time duration.
Current week contracts refer to contracts delivered on the Friday closest to the trading date; next week contracts refer to contracts delivered on the second Friday closest to the trading date. Quarterly contracts refer to contracts with delivery dates on the last Friday of the month closest to the current date among March, June, September, and December, which do not coincide with current week/next week/monthly contract delivery dates.
2. Choose Margin Mode
When establishing a futures contract trading account, please note your current margin mode, as different margin modes have different trading margin calculation methods and risk control systems. When there are no positions or pending orders, meaning all contract margins are 0, users can change the margin mode.
When using [Cross Margin Mode], the risk and returns of all positions in the account will be calculated together. Under the cross margin mode of a unified account, the requirement for opening positions is that the margin ratio cannot be lower than 100% after opening.
When using [Isolated Margin Mode], bidirectional positions for each contract will calculate their margin and returns independently. Users can only place orders if the available margin for opening positions is greater than or equal to the required margin amount. In isolated margin mode, the available margin for opening positions may differ for each contract.
3. Fill in Parameters
Determine the order type, choosing from limit orders, market orders, and other order types. Then, referring to candlestick charts and other information, fill in parameters such as price and quantity\amount.
When placing contract orders, the required margin is the BTC quantity equivalent to the contract value at the time of execution divided by the leverage multiplier. Users can only place orders if their account equity is greater than or equal to the margin amount after successful trading.
4. Hold Positions
After placing an order, wait for execution. Once executed, the user holds a position in the corresponding long or short direction.
5. Adjust Positions
Users can also adjust positions according to market conditions at any time, locking in profits or stopping losses by closing positions, or continuing to open positions to increase returns.
6. Delivery and Settlement
On the delivery date, if the corresponding delivery contract has not been closed, unclosed contracts will be settled at the delivery index price of one dollar per point. All profits and losses from closing positions will be aggregated into the realized profit and loss item of the user's contract account.
Perpetual contracts can be settled at any time according to market conditions, with no delivery date restrictions.
After settlement is completed, all realized profits and losses will be aggregated into the account balance. You can view this in the assets section.
**Note:** For terms such as margin ratio, closing profit, position reduction, forced liquidation, etc., see the article "Futures Contract Trading Terminology"
**Risk Warning:** Digital currency trading involves high risks, with prices potentially experiencing significant volatility and even becoming worthless. Derivatives trading in digital currencies carries even higher leverage and risk, suitable only for professional investment institutions or individuals with extensive trading experience. You should carefully consider whether investment trading is suitable for you based on your financial situation.
Disclaimer
This article may contain content related to products that are not available in your region. This article is intended to provide general information only and is not responsible for any factual errors or omissions. This article represents only the author's personal views and does not represent OKX's views. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risks and may experience significant volatility or even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals regarding your specific circumstances. Information appearing in this article (including market data and statistical information, if any) is for general reference only. While we have taken all reasonable care in preparing this data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "This article is copyrighted © 2025 OKX and used with permission." Permitted excerpts must cite the article name and include attribution, such as "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.
Expand
What is Futures Contract Trading?
Types of Futures Contracts
How is Futures Contract Trading Conducted?
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