I just received some questions about what futures are, so I wrote this article to give newcomers a clearer understanding of this type of trading.

Simply put, futures are a way to place orders predicting price trends on trading platforms. You choose Long if you believe the price will go up, and Short if you think it will go down. If you're correct, you make a profit; if you're wrong, you incur a loss — that's basically how it works.

But what makes futures risky and requires caution? It's leverage. Most platforms allow up to x100 leverage, meaning if you have $1, you can borrow an additional $99 to trade with $100. The good thing is that profits are amplified, but the bad thing is that losses are also magnified. If losses become too large, the platform will liquidate your assets — resulting in a complete wipeout.

I've seen too many newcomers who don't understand what futures are and use high leverage, only to have their accounts wiped out. It’s really common.

So how can you control the risk? First, use SL (Stop Loss) and TP (Take Profit). These are automatic features that help prevent sudden asset loss or liquidation. Always set these two when placing an order.

Based on my experience, I have a few principles for beginners learning about futures:

If trading BTC, stick to a maximum of x5 leverage. If trading ETH or altcoins, x3 is enough. And very importantly, diversify your capital; don’t go all-in at once. Small multiple entries will help you better withstand losses.

Another detail is to pay attention to the liquidation point. Try to keep it as far away as possible, so you don’t get an email about losing your assets just by a quick glance.

Finally, this is just my personal experience, not investment advice. If you want to learn more about what futures are and other trading strategies, you can follow me for updates on news and signals. Wishing you safe trading!