Trading Bitcoin Futures? Here is a test

I've noticed a recent influx of questions regarding BTC and LTC futures on the daily thread. Many first timers with questions like: where to trade them, socialized losses and leverage. I compiled a list of questions that a trader should answer to fully understand futures. Please add to the list if I miss something. Google for all answers.

Because futures are huge leverage up to 20x or 50x. So many people lost their shirts during the crash to 170 and short covering to 300. I wrote a post back then about how I personally lost a lot of money. I really recommend traders to fully understand the risk and the difference between futures/margin and spot trading. In addition, use a very small size, <10% account size at 10x leverage.

So far there are 3 exchanges that offer futures trading:

OKcoin:

  • Leverage: 10x-20x

  • Insurance for liquidation: insurance fund

  • Forced liquidation at 90% with 10x

  • Denominated in USD

  • Liquidity: Highest liquidity, but we have confirmed cases of fake volume.

Huobi/Bitvc:

  • Leverage: 10-20x

  • Insurance for liquidation: none. Counterparty with the highest leverage closes when you liquidate.

  • Forced liquidation at 100%, read above.

  • Denominated in RMB

  • Liquidity: Second

796:

  • Leverage: 10-50x

  • Insurance for liquidation: insurance fund

  • Forced liqudiation 90% with 10x

  • Denominated in USD

  • Liquiditiy: Third

BTC futures questions

  • What is open interest, and why is that different from volume?

  • Why is futures price often higher than spot price? What does it mean?

  • Contango Vs. Normal Backwardation

  • Which day do OKC/BitVC/796 futures expiry for its weekly futures? Answer here

  • How are futures settlement calculated for each of 3 exchanges.

  • Do I pay interests trading futures, a leveraged product?

  • Futures market is traditional used for speculators and ____?

  • What additional risk do you assume trading futures compared to spot?

  • Socialized losses for for each exchange?

  • Quanto and Inverse futures, what are they?

Let me know what you guys think, if I missed something, feel free to add on to the list. I also wrote a miniguide okcoin futures guide in the past, a short read. If don't have an account yet, you can open an account under me in the bitcoin trading guide.