How to start with crypto futures: your first trade, step by step

What you need before your first trade

For your first futures trade you need a verified account on an exchange, a USDT balance in your futures account and three numbers decided before you enter: how much you can lose, where the stop goes and how big the position will be. Without those three, leverage decides for you.

• The account: almost every exchange asks you to verify your identity before you can deposit, trade or withdraw. Do it before you need it, because the review can take anything from a few minutes to a few hours.
• The balance: the most common perpetuals are settled in USDT (USDT-M futures). If your balance is in the spot account, you have to transfer it to the futures account; within the same exchange it is usually instant.
• What you are going to risk: a small part of what you have in futures. How to calculate it is in how much to risk per trade.
• The idea behind the trade: why you enter, where you get out if you are wrong and where you take profit if you are right. If you can’t say it in one sentence, there is no trade yet.

The order screen, field by field

The futures screen differs from one exchange to another, but the fields are nearly always the same: the pair, the margin mode, the leverage, the order type, the quantity, and the stop loss with the take profit. This is what each one does and what to look at when you are starting out:

• Pair: the contract you trade, for example the BTCUSDT perpetual. One with a lot of volume, such as BTC or ETH, jumps around less than a small coin.
• Margin mode: isolated or cross. In isolated, each position risks only its own margin; in cross, the whole futures balance. The difference is explained in what leverage is.
• Leverage: decides how much margin you put up for a given size. It doesn’t change what you lose if the stop is hit, but it does change how close liquidation is: at x5, almost 20% against you; at x50, less than 2%.
• Order type: a market order fills straight away, at whatever price there is; a limit order fills only at your price or better, and usually pays a lower fee.
• Quantity: the position size. Some exchanges ask for it in the coin (0.004 BTC), others in USDT and others as margin. Check which before typing the number.
• Stop loss and take profit: the orders that close the position if the price reaches your maximum loss or your target. Almost every exchange lets you set them in the same entry order.

Before you confirm, the screen shows the estimated liquidation price. If it is closer than your stop, the trade is badly set up: lower the leverage or reduce the size.

A first trade, with numbers

A full example: with 500 USDT in your futures account and a 1% risk, you can lose 5 USDT. If the stop sits 2% from the entry, the position is 250 USDT, and at x5 it only ties up 50 USDT of margin. This is how each piece works out:

If the stop is hit, you lose 5 USDT plus the entry and exit fees: at an example 0.06% per side on 250 USDT, about 0.30 USDT in total. If the take profit is reached, you make 10 USDT minus those same fees. Liquidation sits almost 20% below the entry: the stop is hit long before that.

How to open the trade, step by step

With the numbers done, opening the trade takes less than a minute. The order matters: first the margin mode and the leverage, then the order with its stop, and finally a check of the liquidation price before confirming. On most exchanges it goes like this:

1. Transfer the balance from the spot account to USDT-M futures.
2. Choose the pair (for example, the BTCUSDT perpetual) and switch the margin mode to isolated.
3. Set the leverage you decided on: x5 in the example.
4. Choose a limit order and enter the entry price and the position quantity.
5. Turn on the stop loss and the take profit in the same order and enter their prices.
6. Check the estimated liquidation price and the margin that will be held. If it matches your numbers, confirm the order as a long (or as a short, if you are betting on a fall).

If the limit order doesn’t fill, it stays under “Open orders” until the price gets there or you cancel it. Until then, the position doesn’t exist yet and you aren’t risking anything.

While it is open, and when you close it

With the position open you will see a result that changes every second: it is the unrealised profit or loss, what you would make or lose if you closed at that moment. It only reaches your balance when you close. In the meantime, there are three things to watch:

• The funding rate: on perpetuals it is paid or received every few hours while the position stays open. On 250 USDT, at a 0.01% rate, that is 0.025 USDT each time. More in funding rate.
• The stop: don’t move it further away because the price is getting close. Moving it in your favour, for example to the entry once you are in profit, is another matter.
• The mark price: the exchange calculates liquidation with it and not with the last traded price. That’s why a brief wick on the chart doesn’t always liquidate you.

To get out before the stop or the take profit is hit, use “Close” on the position: a market order exits straight away; a limit order, at your price. When you close, the result goes to your futures balance and any remaining stop and take profit are cancelled.

The most common mistakes when starting out

The mistakes of the first month in futures look very much alike from one person to the next: nearly all of them have to do with the position size, a missing stop or the urge to win back a loss straight away. These are the ones that empty the most accounts:

• Choosing the leverage first and the size afterwards. It’s the other way round: the size comes from the risk, and leverage only decides the margin.
• Opening without a stop, meaning to set it later. A fast move waits for no one.
• Getting the quantity wrong: typing 250 thinking it is USDT when the field wanted the margin, and opening a position five times larger.
• Using cross margin without realising: a single position can take the whole futures balance.
• Trading to win it back right after a loss, with a bigger size. It’s the fastest way to turn a bad day into an empty account.
• Forgetting the fees: with many trades a day and high leverage, they weigh more than the result.

The first few weeks are not for making money: they are for making the process come out the same every time. Numbers, order, stop and check.

Practise before risking more

Before using your normal size, it’s worth repeating the process several times without pressure. There are two ways: the demo account some exchanges offer, with simulated funds, and very small real trades, of a few USDT, where what matters is that every step goes right.

The demo teaches you the screen, but not the fear of losing or how far a market order slips when you are in a hurry. That’s why many people move from the demo to small amounts before increasing their size. If you’d rather watch a video, CryptoBruj explains how to calculate the risk of a futures trade (in Spanish).

Frequently asked questions