Master the Skill of Crypto Trading: Margin vs Futures Explained

By Prachi Kothari
3 Min Read


Margin Trading: Meaning

There are two methods to start a margin trading position:

  • Taking a short position is betting that the price will fall.
  • A long position is one in which you wager that the price will increase.

Futures Trading: Meaning

Investors can safeguard themselves from volatile market conditions and ensure that they can buy or sell a particular cryptocurrency at a specific price in the future via futures. The trader may, however, purchase Cryptos for more than the market price or sell them at a loss if the price changes against their wishes.

Some statistics:

Understanding the Mechanics of Margin Trading

Understanding the Mechanics of Futures Trading

  • A futures contract’s expiration date: when settlement is completed under the stated conditions;
  • The value of the contract: the quantity of bitcoin used as the contract’s underlying asset;
  • Leverage: On some exchanges, traders may borrow money to expand the size of their positions and raise their chances of profiting;
  • The settlement method might typically be a bank transfer, a cryptocurrency, or cash in hand.


  • Opportunity

  • Purpose


  • Different markets

  • Leverage

  • Collateral allocation

  • Duration

  • Investors

 Margin TradingFuture Trading
MarketsSpot marketDerivatives
Collateral allocationLoan with interestGood faith deposit
DurationUp to the traderHave an expiration date
Types of investorsShort-termLong-term


Margin trading

  • Because of the leverage component, crypto margin trading is riskier than regular trading. It may result in the investor losing more money than they initially had. 
  • Given the extreme volatility and unpredictability of cryptocurrencies, the investor may need to contribute additional monies to the collateral to avoid being compelled to sell.
  • Investors begin paying interest on the loan they took out to margin trade on the first day, and the debt grows as the interest accumulates. 

Futures trading

  • The biggest risk in futures trading is the heightened leverage investors can request with their already speculative positions. 
  • Futures frequently have access to far higher leverage levels than the underlying assets, which increases the danger of a margin call that might prolong losses.
  • The price of a futures contract may not be in the investor’s favor at the expiration date due to the tremendous volatility of the cryptocurrency market.



In a futures contract, a buyer or seller commits to buy or sell an underlying asset at a future price. You can go long or short on futures, depending on your directional bet.