Ethereum derivatives and futures trading exchanges – Leverage trade ETH

Interested in trading Ethereum futures and are looking for platforms where you can trade ETH with leverage? The following post is for you.

Ethereum – A technology with great potential and lots of promises. Being the second largest cryptocurrency by market cap (Next to Bitcoin) and with a trading volume of several billion dollars every 24 hours makes it native coin ETH so appealing to trade. Traders can trade ETH against USD, Bitcoin and various other currency pairs.

There are two options to trade the Ethereum cryptocurrency. 1. On Spot exchanges and 2 Derivative platforms. Here we’ll only be listing derivative exchanges where you can leverage trade ETH futures.

Previously we’ve made a list on top cryptocurrency derivative exchanges. Its for trading Bitcoin futures. Similar to that post here we’ll be listing top Ethereum derivatives exchanges where you can trade Ethereum futures. We’ll include both CEX (Centralized Exchanges) as well as DEX (Decentralized Exchanges) that is the Ethereum based leverage trading protocols.

The following Ethereum leverage exchanges offer both Futures as well as Perpetuals contracts with up to 100x leverage. Also their contracts support both USD and ETH (coin margined) where you can open an ETH position with both USDT and ETH.

With simple to use trade interface and powerful trading tools offered by these ETH exchanges you can profit from both rising and falling prices by either going long or short on Ether.

Disclaimer:

Before you trade on these platforms we’d like to inform you that this is only for advanced users who are well aware about derivatives trading. If you are new then you must first learn about Ether futures, understand the contract details and more.

Also note that trading comes with inherent risks. When building an Ethereum position you must do careful risk management and rely on a proper trading strategy in order to protect your capital. Never use high leverage and never trade with money more than you can afford to lose. The following post is not recommended for beginners.

Alright! Now before we check out the list of ETH trading platforms let’s quickly look at what futures trading is.

What is futures trading? Trading Ethereum futures

Futures or Futures contracts are an agreement between two parties to buy or sell an asset at a predetermined future date and price.

A Ether futures contract is a legal agreement between two parties where the buyer agrees to purchase and the seller agrees to sell the underlying asset (ETH) at a fixed price at a future date. Ether Futures is a contract representation of Ether (ETH). The value is derived from ETH and their actual settlement will happen in the future date when the contract is exercised.

With futures investors are not buying or selling any Ethereum. Instead traders are using it to speculate on the assets underlying trend. They buy (long) or sell (short) Ether by speculating its future price.

If you expect the price of ETH will rise then you can go long. If you think the price will fall then you can take a short position which is commonly referred to as short selling. When long you’ll profit when the price of ETH goes up and when you’ve opened a short position you’ll profit when the market goes down.

Futures platforms are typically used by traders to hedge against their investments. With ETH futures you can hedge against the price changes of ETH. Typically when the market plunges you can go short to reduce the impact of losses.

Futures platform also have a built-in leverage system that acts as a multiplier for your returns. By effectively using leverage in futures you can amplify your trading gains. Highly useful when trading in volatile markets.

This is not a beginners guide to trading Ethereum futures. We’re just putting a quick explanation before listing out the platforms. We suggest you to fully understand what Eth futures are and how to use it before you start trading.

Two types of contracts:

On most derivatives platform you’ll find two types of contracts: 1. Perpetual contract and 2. Futures contract.

ETH Derivatives Trading >> ETH perpetual & ETH futures. You can trade both the contracts against USD and they both supports USDT margined (USD-M Futures) and Coin Margined collateral (ETH-M Futures).

Ether Futures are Monthly, Quarterly or Semiannual settled contracts. But usually they have a limited period for expiry and they are often quarterly expiring contracts. Quarterly futures expire every quarter. You can keep a position opened till the expiry date or close it in advance.

On the other hand the perpetual contracts as the name suggests they are perpetual. These contracts are never ending and they do not expire. You can hold a position as long as you wish or until it gets liquidated.

Perpetual contracts also carry a funding fee. Funding fees are paid by traders peer to peer every 8 hours and is the cost for holding the perpetual contracts. Traders will either receive or pay funding every 8 hours depending on the side and their position size. The trading platform automatically calculates the funding fee every eight hours. Learn more about the funding rate.

Both perpetual and futures contract carry leverage. The max leverage is 100x and the amount of leverage offered varies depending on the exchange. Some offer leverage up to 100x on ETH contracts and some only offer up to 50x and some on the other hand offer leverage up to 125x (Binance for example).

To start trading you only need to deposit the margin currency: USDT to trade the USDT Margined Futures (Perpetual and Quarterly contracts) and ETH for Coin Margined Futures (Perpetual and Quarterly contracts).

Alright! Why derivatives and why not spot?

Ethereum Spot exchange vs Derivatives

Spot exchange is where you actually buy or sell ETH using fiat or other crypto currency pairs. The only way to make profit on spot exchange is by buying ETH at low price and selling it at high price. This particular type of trade only works in an uptrend and not when a market is bearish. In a bear market all you can do is sell your ETH and wait for low prices. But this trade is not possible for those who don’t own ETH. Also on spot trading the leverage is always 1x. Meaning if you want to trade (buy or sell) you have to risk 100% of the money you put towards your trade.

Trading futures is an alternative to Spot trading where you are not actually buying or selling the underlying crypto (ETH). Instead you’re speculating on the direction of the market. Unlike spot you can trade profitably in all market conditions. By going long Ether futures you can profit from rising ETH prices and you can also profit by going short when the price is falling.

Furthermore, leverage trading ETH is not possible in spot. Leverage allows you to open positions larger than your trading capital. You can open a position that is 10 times or even 100 times bigger than your trading capital. That is the power of leverage. The higher the leverage the lower the capital required.

Due to this futures trading are considered to be extremely capital efficient (less money required) compared to spot trading where the leverage is always 1x and margin trading where you can leverage up to 3-5x.

Ethereum Leverage Trading Example

For example if you have 10 Ethereum and are worried about price decline then you have to utilize all the money on spot exchange to sell. But with futures by using 50x leverage you are only risking 2% of your ETH holding. It doesn’t have to be 50x, you can use 40x, 30x, 20x, 10x or even 2x all based on your risk appetite. Futures platform gives you the flexibility to position yourself in the market all while maintaining low risk.

With Ethereum futures platform you can multiply your ETH profits by applying advanced trading strategies and maximize returns by utilizing the power of leverage. Speculate on the direction of ETH market all while risking less ETH on a spot exchange.

Let’s say you want to take a short position of 100 ETH. By using 10x leverage you are only risking 10 ETH and if your position gets liquidated you only lose this 10 ETH. Now since you’ve opened up a short position if the price of Ethereum falls by 3% you’ll make a profit of 30 ETH. Whereas with spot trade you are risking 100 ETH (selling 100 ETH) and by buying back after 3% price decline you’ll only gain 3 ETH.

Since because your leverage trade position size is greater than the capital deployed, the impact of prices moves gets magnified. You receive higher profits if your trade position goes the right way. However your losses will also be magnified if your trade is unsuccessful.

Pros and cons of trading ETH futures

Compared to spot trading of Ether; trading ETH through futures offer several advantages.

Pros:

1. Leverage: Ability to use leverage to increase the capital size. You’ll gain significant exposure to ETH with only a small amount of capital. Trade more with less. Also with leverage, your profits are greatly magnified even on small price movements.

2. Flexibility: Unlike spot exchange; you don’t have to own ETH to trade the Ethereum futures. Non-ETH holders can also speculate on the price of Ether and make profits. All you have to do is open a position in Ether futures contract using USDT, USDC or other stable currency. Also you can profitably trade both the rising & falling markets. Go long when bullish and short when bearish.

3. Hedge Price Risk: If you are a ETH holder you can use futures to mitigate the price risk. You can hedge against your spot market position. Your short position on futures acts as a downside protection. By only risking small portion of your Ether you are effectively locking the USD$ value of your portfolio.

4. Liquidity: Future markets are highly liquid. With high liquidity it becomes easy for traders to enter or exit a position with zero to minimal slippage.

Cons:

Futures trading carries a greater risk compared to spot. It carries an unlimited liability risk where you’ll lose your entire trading capital. This can get quite addictive and in some some extreme cases many traders have gone completely bankrupt from trading futures.

As we said never trade futures if you fully do not understand it. Also never utilize 100x leverage and never trade with money more than you can afford to lose.

With all that said let’s look at the list of Ethereum derivative platforms where you can leverage trade ETH.

Ethereum perpetuals / ETH futures trading exchanges

The list that you see here are centralized platforms and we’ve listed these ETH derivative exchanges based on their trading volumes.

Other than these here are few other centralized exchanges that supports Eth perpetual and ETH futures trading.

Kucoin Futures, Poloniex, BTSE, Kraken, BingX, AscendEX (BitMAX), Crypto.com, Delta Exchange and Gate.io.

Trading Ether futures on these platform is easy. Register to open a futures trading account, deposit fund, choose the contract of your choice, select leverage and then place order.

Again before placing any order consider your risk tolerance and financial goals.

All these exchange uses maker / taker model for fees and the fees goes as low as 0.01% for taker and 0% for maker based on your trade volume. Learn more about Maker and Taker fees.

You also got CME Ethereum Futures. CME Group or Chicago Mercantile Exchange is the worlds largest derivatives exchange which also supports trading of ETH futures. But in order to trade ETH futures on CME you’ll have to setup an account with an already registered futures broker. Only through broker you can place order.

More about CME Ether futures : https://www.cmegroup.com/trading/ether-futures.html

For Quotes, Settlements, Volume & OI data on CME Ether Futures: https://www.cmegroup.com/markets/cryptocurrencies/ether/ether.quotes.html

Decentralized Exchanges: Ether DEX

Here are the list of decentralized protocols where you can buy / sell ETH futures. Just connect your Metamask to start trading.

• dYdX – https://trade.dydx.exchange/
• ApolloX – https://www.apollox.finance/en/futures/ETHUSDT
• kine protocol – https://kine.io/en-us
• Injective Pro – https://injective.exchange/
• Perpetual protocol – https://app.perp.com/
• Drift protocol – https://app.drift.trade/
• Deri protocol – https://deri.io/#/trade/futures/ETHUSD

Among this list ApolloX is the world’s first centralized and decentralized (CEX-DEX) hybrid crypto exchange. You can switch between centralized and decentralized platform.

dYdX is the largest decentralized derivatives exchange by volume and open interest. Its an Ethereum based leverage trading protocol and a decentralized crypto derivatives perpetual exchange that supports Bitcoin futures, Ethereum futures and various other DeFi tokens and Altcoins.

All others are also high performance non-custodial exchanges that allows users to leverage trade Ethereum with the aid of Ethereum smart contracts.

That’s all! Do you know any other popular ETH trading platform which we failed to mention here. Do let us know in the comments.

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