Derivatives have been on the front page of the international financial press lately. However, they have been traded successfully for centuries, and the global daily turnover in derivatives is in the billions of US dollars. However, cryptocurrency derivatives have emerged very recently but have managed to become one of the most sought-after trading tools on the market. 

In this article, we will try to overview the basic concepts related to derivatives and the principles of trading these instruments. This section will cover the following questions about FTX derivatives trading or FTX cryptocurrency derivatives trading. You will become familiar with the FTX cryptocurrency derivatives trading platform. 

FTX cryptocurrency derivatives trading platform
FTX cryptocurrency derivatives trading platform

What are crypto derivatives

Crypto derivatives are secondary contracts or financial instruments whose value is determined by the underlying asset. For example, BTC, ETH or other support.

Types of Crypto Derivatives

Derivatives form the basis of many trading strategies, and although they have been around for a very long time, their area of application continues to expand as the financial markets develop. When talking about FTX derivatives in Malaysia, it is best to familiarise yourself with the main types of derivatives initially.

  • Futures are contracts to sell or buy an underlying asset at a predetermined future price. An example of such a contract is a pre-order of some commodity, in which the buyer pays a predetermined price but receives the goods later;
  • Forwards are similar to futures but are less standardised and are not traded on exchanges. Forwards are traded on the over-the-counter (OTC) markets, but this contract also involves buying the underlying asset in the future at a set price;
  • Options are contracts that give the right, but not the obligation, to buy or sell an underlying asset at a future date at a predetermined price. An example of options in real life is asking the seller to hold an item for a while;
  • Swaps are an instrument that involves two contracts at once. The first contract seeks to buy or sell the underlying asset when it is entered into, and the second contract specifies the conditions for selling or buying the underlying asset in the future. Swaps are regarded as a more complex version of futures. An example: a purchase of a commodity from a supplier and an agreement to sell the same commodity to a customer in the future;
  • CFD (contract for difference) - contract for difference in the underlying asset price. If the cost of an underlying asset falls during the contract term, the buyer pays the difference. If the price of the asset rises, the seller pays the difference. A simple example of such a contract is a special offer in some shops, where the seller promises to pay the price difference if the buyer finds the product cheaper.
FTX trading room
FTX trading room

A brief history of derivatives

The following brief historical sketch helps to present the centuries-long development process and use of derivatives. Fortunes have been made and lost in the markets for hundreds of years!

The 30s of the 17th century. Tulips.

In the late 30s of the XVII century, Holland and England were swept up in tulip mania, a passion for tulip bulbs. Options on them were traded in Amsterdam as early as the beginning of the 17th century, and by the 1930s, forward contracts were being sold on the Royal Exchange in England. Unfortunately, the extravagant flowering of trade and soaring profits from tulip bulb transactions were followed by an equally devastating market crash and loss of fortunes in 1636-37.

One of the most valuable tulip varieties was considered to be Semper Augustus. In 1636 there were only two such bulbs in Holland. It is known that some speculators offered 12 acres of land intended for development for just one of them. The hero of another story was a sailor who brought the news to a wealthy merchant who proudly displayed a Semper Augustus bulb on the counter of his shop. The merchant rewarded the sailor for his service with a smoked herring for breakfast. The sailor loved herring and onions, and when he saw the 'onion' on the counter, he slipped it into his pocket. When the loss was discovered, the salesman rushed after him, but the sailor had already finished the herring and the 'onion'. His breakfast was worth a year's wages for the entire crew! The unfortunate sailor got off with a few months in jail for stealing the onion.

FTX cryptocurrency derivatives list
FTX cryptocurrency derivatives list

About FTX derivatives trading platform

FTX derivatives trading platform is a fast-growing cryptocurrency exchange that supports spot trading and a vast array of unique derivatives and securities.

FTX is one of the world's top five largest crypto exchanges by trading volume. In the last 24 hours, the trading volume on the platform amounted to $12.1bn, while its American division (FTX US) had $194m.

FTX was founded by former Jane Street Capital trader Sam Bankman-Fried and former Google developer Gary Wang. They launched the successful trading firm Alameda Research before the exchange, which helps FTX maintain high order book depth. The lead investor in FTX is another popular exchange, Binance. FTX is being developed under the slogan "from traders for traders".

Basic FTX functions 

Let's take a look at the most frequently used functions of the FTX platform. 

FTX crypto futures trading
FTX crypto futures trading

1. Wallet.

The wallet page allows you to view the balance of all your currencies/tokens and information on deposited and withdrawn funds.

Wallet functions also include:

  • Balance 
  • Deposit/withdrawal 
  • Conversion 
  • Fiat currencies
  • USD Stablecoins

2. Markets.

The FTX derivatives trading platform offers a wide range of choices, from open-ended and quarterly futures, spot markets with fiat currency support, and leveraged tokens and volatility trading products.

3. Trading.

So, you have selected a financial product, namely FTX cryptocurrency derivatives. You may now go to the trade page for this product and start FTX crypto futures trading.

4. Customising the user interface.

There are many ways to customise the FTX user interface.

Firstly, you can drag and drop all fields, reorder data in the order placement form and order book, and much more.

In addition, many other customisation options can be found by clicking the gear icon in the top right corner of any page or on the "User" tab in the mobile app.

FTX ecosystem
FTX ecosystem

Ensuring security

It is no secret that security is a high priority for anyone interested in FTX crypto futures in Malaysia. 

On the FTX platform website, you can change your password and other security settings on your profile page.

The main thing you need to do to make FTX futures trading secure is to enable two-factor authentication. We recommend using Authy/Google Authenticator for this, although you can also use SMS. It would be best to do this BEFORE depositing money into your FTX account. 

On the Authentication setup page, you will see the QR code and 16 digit code; they are equivalent and act as a secret key for two-factor authentication (2FA). Enter this data into any popular 2FA application, such as Google Authenticator, and you'll get authentication codes.

You can also add a separate password for withdrawal and define when 2FA is mandatory.

Under "Logins", you can create custom logins: you can define which sub-accounts they can be used to access, as well as specify their permission/authorisation level.

The settings page also allows you to create and manage API keys.

Registration on  FTX derivatives trading platform
Registration on FTX derivatives trading platform

How to start trading FTX futures or other instruments

  • Firstly, you will need to register on the FTX platform. To do this, you will need to enter your email address and password in the pop-up registration window. Voila! Registration completed!
  • Next, set up two-factor authentication (2FA) in the Account Security section.
  • One of the essential steps is verification according to KYC regulations for private client accounts. All deposit and withdrawal transactions are subject to mandatory Chainalysis verification. So fill out the KYC form and upload your documents to be verified as Tier 2 (available cryptocurrency and fiat currency withdrawals). 

FTX recently partnered with Chainalysis to monitor suspicious cryptocurrency transactions in real-time using Chainalysis Know Your Transaction (KYT), an anti-money laundering (AML) compliance solution for cryptocurrency transactions. It is the first software-based compliance solution to support 15 cryptocurrencies. 

Bottom line

If you are interested in FTX futures, you should know that derivatives are significant for risk management. They allow you to segregate risk and limit it. Derivatives are used to transfer risk elements and can thus serve as a form of insurance.

Derivatives are instruments that are derivative, and the risks involved in trading them are therefore dependent on what happens to the underlying asset. For example, suppose the settlement price of a derivative is based on the cash price, which changes daily. In that case, the risks associated with that derivative will also change daily. In other words, risks and positions require continuous monitoring because both gains and losses can be very significant.

So if you want to use this instrument to make money, try to monitor the information and events. Be sure to study the strategies and the market. Then success will surely come to you!

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